| 1. | Following is the Receipts and Payments Account of Nanoo Club for the year ended 31st March, 2009: | Receipts | Amount (Rs.) | Payments | Amount (Rs.) | Opening balance:
Cash
Bank
Subscription received
Entrance donation
Interest received
Sale of fixed assets
Miscellaneous income
Receipts at coffee room
Wines and spirits
Swimming pool
Tennis court |
10,000
3,850
2,02,750
1,00,000
58,000
8,000
9,000
10,70,000
5,10,000
80,000
1,02,000 | Salaries
Creditors
Printing and stationery
Postage
Telephone and fax
Repairs and maintenance
Glass and table linen
Crockery and cutlery
Garden upkeep
Membership fees
Insurance
Electricity
Closing balance:
Cash
Bank | 1,20,000
15,20,000
70,000
40,000
52,000
48,000
12,000
14,000
8,000
4,000
5,000
28,000
8,000
2,24,600 | | 21,53,600 | | 21,53,600 |
Following additional information is provided to you: | (i) | Assets and liabilities as on 31.3.2008 were as follows: | Rs. | Fixed assets
Stock
Investment in 12% Government securities
Outstanding subscription
Gratuity fund
Prepaid insurance
Sundry creditors
Subscription received in advance
Entrance donation received pending membership | 5,00,000
3,80,000
5,00,000
12,000
1,50,000
1,000
1,12,000
15,000
1,00,000 |
| | (ii) | Subscription received in advance as on 31.3.09 was Rs.18,000. | | (iii) | Outstanding subscription as on 31.3.09 was Rs.7,000. | | (iv) | Outstanding expenses as on 31.3.09 are: Salaries
Electricity | :
: | Rs.8,000
Rs.15,000 |
| | (v) | 50% of the entrance donation was to be capitalized. There was no pending membership as on 31.3.09. | | (vi) | The cost of assets sold as on 1.4.08 was Rs.10,000. | | (vii) | Depreciation was provided @ 10% p.a. on fixed assets on written down value basis. | | (viii) | A sum of Rs.20,000 received in October, 2008 as entrance donation from an applicant was to be refunded, as he has not fulfilled the requisite membership qualification. The refund was made on 3.6.09. | | (ix) | Purchases made during the year 2008-09 amounted to Rs.15,00,000. | | (x) | The value of closing stock as on 31.3.09 was Rs.2,10,000. | | (xi) | The Club as a matter of policy charges off to Income and Expenditure account, all purchases made on account of crockery, cutlery, glass and linen in the year of purchase. | | You are required to prepare: | | (i) | Income and Expenditure account for the year ended 31st March, 2009. | | (ii) | Balance Sheet as on 31st March, 2009. |
| 20 | (0) |
| 2. | (a) | Following is the Balance Sheet of Mr. Ram, a small trader, as on 31st March, 2008: | Liabilities | Rs. | Assets | Rs. | Creditors
Capital | 1,00,000
4,00,000 | Cash
Bank
Stock
Debtors
Fixed Assets | 10,000
20,000
80,000
1,00,000
2,90,000 | | 5,00,000 | | 5,00,000 |
A fire occurred on the night of 31st March, 2009, destroying the accounting records as well as the closing cash of the trader. However, the following information was available: | (i) | Debtors and creditors as on 31st March, 2009 showed an increase of 20% as compared to 31st March, 2008. | | (ii) | Credit period: Debtors
Creditors | :
: | 1 month
2 months |
| | (iii) | Stock was maintained at the same level throughout the year. | | (iv) | Cash sales constituted at 20% of the total sales. | | (v) | All purchases were on credit basis only. | | (vi) | Current ratio on 31st March, 2009 was exactly 2. | | (vii) | Total expenses excluding depreciation for the year amounted to Rs.5,00,000. | | (viii) | Depreciation was provided @ 10% on the closing book value of fixed assets. | | (ix) | Bank and cash transactions for the financial year 2008-09 were as under: | (a) | Payment to creditors included Rs.1,00,000 by cash. | | (b) | Received from debtors included Rs.11,80,000 by way of cheques. | | (c) | Cash deposited into the Bank Rs.2,40,000. | | (d) | Personal drawings from Bank Rs.1,00,000. | | (e) | Fixed assets purchased and paid by cheques Rs.4,50,000. | | (f) | Assume that cash destroyed by fire is written off in the Profit and Loss account. |
| | You are required to prepare: | | (i) | Trading and Profit and Loss account of Shri Ram for the year ended 31st March, 2009. | | (ii) | A Balance Sheet as at that date. |
| 8 | (0) |
| | (b) | From the following summarised Cash account of S Ltd., prepare cash flow statement for the year ended 31st March, 2009 in accordance with AS 3 (revised) using direct method. | Summarised Cash Account |
|---|
| (Rs.000) | | (Rs.000) | Opening balance
Issue of share capital
Received from customers
Sale of fixed assets | 50
300
2,800
100 | Payment to suppliers
Purchase of fixed assets
Overhead expenses
Wages and salaries
Tax paid
Dividend paid
Bank loan
Closing balance | 2,000
200
200
100
250
50
300
150 | | 3,250 | | 3,250 |
| 8 | (0) |
| 3. | (a) | The partnership of Sakshi Agencies decided to convert the partnership into Private Limited Company named Rameshwar Company Pvt. Ltd. with effect from 1st January, 2008. The consideration was agreed at Rs.2,34,00,000 based on firm’s Balance Sheet as on 31st December, 2007. However, due to some procedural difficulties, the company could be incorporated only on 1st April, 2008. Meanwhile, the business was continued on behalf of the company and the consideration was settled on that day with interest at 12% p.a. The same books of accounts were continued by the company, which closed its accounts for the first time on 31st March, 2009 and prepared the following summarized Profit and Loss account: | Rs. | | Rs. | To Cost of goods sold
To Salaries
To Depreciation
To Advertisement
To Discount
To Managing Director’s
remuneration
To Miscellaneous office expenses
To Office cum showroom rent
To Interest
To Profit | 3,27,60,000
23,40,000
3,60,000
14,04,000
23,40,000
1,80,000
2,40,000
14,40,000
19,02,000
38,34,000 | By Sales | 4,68,00,000 | | 4,68,00,000 | | 4,68,00,000 |
The company’s only borrowing was a loan of Rs.1,00,00,000 at 12% p.a. to pay the purchase consideration due to the firm and for working capital requirements. The company was able to double the monthly average sales of the firm from 1st April, 2008, but the salaries trebled from the date. It had to occupy additional space from 1st July, 2008 for which rent was Rs.60,000 per month.
Prepare a Profit and Loss account in columnar form apportioning costs and revenue between pre–incorporation and post–incorporation periods. | 8 | (0) |
| | (b) | On 1st April, 2008, Mr. Neel purchased 5,000 equity shares of Rs.100 each in X Ltd. @ Rs.120 each from a Broker, who charged 2% brokerage. He incurred ½% as cost of shares transfer stamps. On 31st January, 2009, Bonus was declared in the ratio of 1:2. Before and after the record date of bonus shares, the shares were quoted at Rs.175 per share and Rs.90 per share respectively. On 31st March, 2009, Mr. Neel sold bonus shares to a broker, who charged 2% brokerage. Show the Investment Account in the books of Mr. Neel, who held the shares as current assets and closing value of investments shall be made at cost or Market value, whichever is lower. | 8 | (0) |
| 4. | (a) | An electricity company decided to replace some parts of its plant by an improved plant. The plant to be replaced was built in 1995 for Rs.35,00,000. It is estimated that it would cost Rs.65,00,000 to build a new plant of the same size and capacity. The cost of the new plant as per the improved design was Rs.1,05,00,000 and in addition, material belonging to the old plant valued at Rs.3,80,000 was used in the construction of the new plant. The balance of the plant was sold for Rs.3,00,000. Compute the amount to be written off to revenue and the amount to be capitalized. Also prepare Plant account and Replacement account. | 8 | (0) |
| | (b) | From the data relating to a company which went into voluntary liquidation, you are required to prepare the liquidator’s Final Statement of Account. | (i) | Cash with liquidators (after all assets are realised and secured creditors and debentureholders are paid) is Rs.7,50,000. | | (ii) | Preferential creditors to be paid Rs.35,000. | | (iii) | Other unsecured creditors Rs.2,30,000. | | (iv) | 5,000, 10% preference shares of Rs.100 each fully paid. | | (v) | 3,000 equity shares of Rs.100 each, Rs.75 per share paid up. | | (vi) | 7,000 equity shares of Rs.100 each, Rs.60 per share paid up. | | (vii) | Liquidator’s remuneration is 2% on payments to preferential and other unsecured creditors |
| 8 | (0) |
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| 5. | Answer any eight out of the following: | 8x2=16 | |
| | (i) | Amount of Life Assurance Fund is Rs.5,000 lacs and net liabilities were Rs.4,800 lacs. Calculate profit under Valuation Balance Sheet. | | (0) |
| | (ii) | What is "average clause" under insurance claim? | | (0) |
| | (iii) | Give the journal entry to be passed for accounting unrealized profit on stock, under amalgamation. | | (0) |
| | (iv) | A and M are partners, sharing profits and losses in the ratio of 3:2. G is admitted for 1/4th share. Thereafter, N enters the partnership for 20 Paise in a Rupee. Compute new profit sharing ratio. | | (0) |
| | (v) | A company entered into an underwriting agreement with Mr. B for 60% of the issue of Rs.50,00,000, 15% debentures, with a firm underwriting of Rs.5,00,000. Marked applications were in respect of debentures worth Rs.35,00,000. Compute liability of Mr. B and commission payable to him | | (0) |
| | (vi) | Enumerate two points which the financial statements should disclose in respect of Borrowing Costs as per AS 16. | | (0) |
| | (vii) | Mr. X purchased a machine on hire–purchase system, Rs.30,000 being paid on delivery and the balance in five installments of Rs.60,000 each, payable annually on 31st December. The cash price of the machine was Rs.3,00,000. Compute the amount of interest for each year. | | (0) |
| | (viii) | Mr. T purchased 1,000 nos. 10%debentures of Rs.100 each on 1st April, 2009 at Rs.96 cum–interest, the previous interest date being 31st December, 2008. Compute cost of investment. | | (0) |
| | (ix) | Name two methods of accounting for amalgamations as contemplated by AS 14. | | (0) |
| | (x) | The Managing Director of A Ltd. is entitled to 5% of the annual net profits, as his remuneration, subject to a minimum of Rs.25,000 per month. The net profits, for this purpose, are to be taken without charging income–tax and his remuneration itself. During the year, A Ltd. made net profit of Rs.43,00,000 before charging MD’s remuneration, but after charging provision for taxation of Rs.17,20,000. Compute remuneration payable to the Managing Director. | | (0) |
| 6. | Answer any four of the following: | 4x4=16 | |
| | (a) | Sony Pharma ordered 12,000 kg. of certain material at Rs.80 per unit. The purchase price includes excise duty Rs.4 per kg in respect of which full CENVAT credit is admissible. Freight incurred amounted to Rs.77,400. Normal transit loss is 3%. The company actually received 11,600 kg. and consumed 10,100 kg. of material. Compute cost of inventory under AS 2 and abnormal loss. | | (0) |
| | (b) | Explain the provisions of AS –5 regarding accounting treatment of prior period items. | | (0) |
| | (c) | Mention, four advantages and four disadvantages of pre–packaged accounting software. | | (0) |
| | (d) | From the following information relating to X Ltd., calculate Diluted Earnings Per Share as per AS 20: Net Profit for the current year
Number of equity shares outstanding
Basic earnings per share
Number of 11% convertible debentures of Rs.100 each
Each debenture is convertible into 8 equity shares.
Interest expense for the current year
Tax saving relating to interest expense (30%) | Rs.2,00,00,000
40,00,000
Rs.5.00
50,000
Rs.5,50,000
Rs.1,65,000 |
| | (0) |
| | (e) | The Revenue Account of a Life Insurance Company shows the Life Assurance Fund on 31st March, 2009 at Rs.62,21,310 before taking into account the following items: | (i) | Claims recovered under re–insurance Rs.12,000. | | (ii) | Bonus utilized in reduction of Life Insurance premium of Rs.4,500. | | (iii) | Interest accrued on securities Rs.8,260. | | (iv) | Outstanding premium Rs.5,410. | | (v) | Claims intimated but not admitted Rs.26,500. |
Compute the Life Assurance Fund on 31st March, 2009, after taking into account the above omission. | | (0) |
| | (f) | What is the difference between the Sectional and Self–balancing system? | | (0) |
