CS Foundation :: Financial Accounting : June 2005

Explain any four of the following :

(i) (ii) (iii) (iv) (v)

Contingent liabilities Finance lease Closing entries Convention of conservatism Average due date.

What do you mean by 'normal loss' and 'abnormal loss' in consignment ? How are they treated in the books of account of consignor ?

On 31st March, 2005, the cash book of a trader showed a bank overdraft of Rs.7,640. On a comparison of the cash book with the bank pass book, the trader ascertained the following differences:

	Rs.
Cheques deposited with the bank, but not credited by the bank	10,000
Interest on securities collected by the bank, but not yet recorded in the cash book	1,280
Dividend collected by the bank, but not yet recorded in the cash book	1,000
Cheques issued, but not yet presented to the bank for payment	37,400
Bank charges not yet recorded in the cash book	340

From the above information, you are required to prepare the bank reconciliation statement showing balance as per pass book. Also ascertain the balance as per cash book after recording the missing items.

From the records of an oil distributing company, the following summarised information is available for the month of March, 2005 :

	Rs.
Sales	9,45,000
General administrative expenses	25,000
Opening stock : 10,000 ltrs. @ Rs.30 per ltr.	3,00,000

Purchases:	7th March, 2005,20,000 ltrs.@ Rs.28.50Perltr
	21s1 March, 2005,10,000 ltrs. @ Rs.30.30Perltr
Closing Stock:	13,000 ltrs.

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X, Y and Z were partners in a business sharing profits and losses equally. Their balance sheet as at 31st March, 2005 was as follows :

Balance Sheet as at 31st March, 2005
Liabilities	Rs.	Assets	Rs.
X's capital Z's capital X's loan Creditor	1,60,000 1,00,000 2,00,000 10,00,000	Machinery Furniture Stock Debtor Cash at bank Y's capital (Overdrawn)	4,00,000 1,60,000 5,60,000 2,00,000 10,000 1,30,000
	14,60,000		14,60,000

Due to adverse financial position of all the partners, the firm was dissolved as on the abovementioned date. The assets were realised as follows :

	Rs.
Machinery Furniture Stock Debtors	1,40,000 1,00,000 2,60,000 1,10,000

Expenses on realisation totalled Rs. 10,000. All the partners were insolvent. While a sum of Rs.20,000 was received from Y's private assets, nothing could be recovered from the private estates of X and Z.
Prepare the realisation account, partners' capital accounts, creditors account and deficiency account in the firm's ledger. Also show cash book.

Deepak of Delhi has a branch at Agra. Goods are invoiced to the branch at cost plus 25%. Branch is instructed to deposit cash every day in the Head Office account with the bank. All expenses are paid through cheques by the Head Office except petty cash expenses which are paid by the branch manager. Prepare the branch account in the books of Head Office after taking into account the following information:

Rs.

Stock at invoice price on 1st April, 2004 Stock at invoice price on 31st March, 2005 Debtors on 1st April, 2004 Debtors on 31st March, 2005 Cash sales for the year Credit sales for the year Cash remitted to Head Office Furniture purchased by branch manager Goods invoiced to branch by Head Office Expenses paid by Head Office Expenses paid by branch Cash sent to branch by Head Office with which -branch purchased a safe for its use

25,000 30,000 14,000 18,000 1,08,000 70,000 1,57,000 12,000 1,82,000 16,400 1,200 13,000

What is meant by 'depreciation' ?Why is it necessary to provide depreciation ?

113

Novel Education Society supplied the following information :

Income and Expenditure Account for the year ended 31st March, 2005
Expenditure	Rs. (in '000)	Income	Rs. (in '000)
To Salaries To Scholarships To Rent To General expenses To Audit fees To printing tickets and souvenir To Cost of entertainment To loss on sale of book value, (Rs. 80,000) To depreciation To surplus i.e.,excess of income over	830 4,130 280 310 60 150 350 30 60 600	By Subscriptions By Government grant By Proceeds of tickets for Entertainment By Advertisement in souvenir By interest on bank fixed deposits (for full year @ 6% per annum)	4,780 530 830 510 150
	6,800		6,800

Receipts and Payments Account for the Year ended 31st March, 2005
Receipts	Rs. (in '000)	Payments	Rs. (in '000)
To Balance b/f To Subscriptions To Government grant To Sale of tickets To Advertisements in souvenir To Interest on bank fixed deposits To sale of furniture	380 4,600 530 830 460 100 50	By Salaries By Scolarships By Rent By General expenses By Printing of tickets and souvenir By cost of entertainment By furniture By balance c/f	940 4,010 260 310 120 350 200 760
	6,950		6,950

On 31s' March, 2004, subscriptions due were Rs. 1,50,000, furniture on that date was Rs.6,00,000.
Prepare balance sheets as at 31s' March, 2004 and 31s' March,2005:

On 10th August, 2004, the godown of a firm caught fire.From the following figures, ascertain the- loss of stock sufferedby the firm :

	Rs.
Stock on Ist April, 2003 Purchases during the year ended 31" March, 2004 Sales during the, year ended 31st March, 2004 Stock on 31st March, 2004 Purchases from lst April, 2004 till the date of fire Sales from 1st. April, 2004 till the date of fire The value of the salvaged stock was agreed to be Rs.	6,79,500 28,60,500 34,00,000 5,10,000 16,36,400 20,00,000 1,37,000

It was the practice of the firm to value stocks at cost less 15%. On Ist April, 2004, the prices were raised by the firm by 10%.

On 1st December, 2004, Shyam accepted for mutual accommodation a bill drawn on him by Ram for Rs.80,000 at three months. The bill was discounted at 5% per annum and the proceeds were shared equally. On the same day and for the same purpose, Shyam received an acceptance from Ram for Rs.90,000 at three months. The bill was discounted for Rs. 1,800 as discount and the proceeds were shared as to two-thirds to Shyam and one-third to Ram.
On the due date, Shyam met his acceptance. But, Ram could not do so because he had become insolvent. On 31st March, 2005, his estate paid a first and final dividend of 50 paise in a rupee.
Pass the journal entries for all the transactions in the books of Shyam.