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Past papers/ Adv Accounting/ July 2021
Paper 29 Qs
Question Paper · July 2021

CA Inter Adv Accounting

This page contains all 29 questions from the CA Inter Advanced Accounting Question Paper for the July 2021 attempt cycle, sourced from VSI Jaipur, CATS.

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Q.b 05 marks medium Insurance Claim - Goods Destroyed - Ascertainment of Loss ⚡ Try this Q →
At the time of valuing stock as on 31st March, 2020, a sum of ₹ 7,000 was written off in a particular item, which was originally purchased for ₹ 20,000 and was sold during the year for ₹ 30,000. During the transaction relating to this item, the gross profit earned during the period was 25% on sales. Mr. X has insured his stock for ₹ 30,000. Compute the amount of the claim.
CTTP

Worked Solution

✓ Verified

Step 1: Determine Proper Insurable Cost Price

The item was sold for ₹30,000 with a gross profit of 25% on sales. This establishes the normal cost structure:
- GP amount = 25% × ₹30,000 = ₹7,500
- Proper COGS = ₹30,000 - ₹7,500 = ₹22,500

Although originally purchased for ₹20,000, the ₹22,500 represents the proper insurable value based on normal selling price and established profit margin for this item.

Step 2: Ascertain Loss from Write-off

At valuation on 31st March 2020, a write-off of ₹7,000 was recorded against this item:
- Insurable value (proper cost) = ₹22,500
- Write-off (damage/loss) = ₹7,000
- Current valuation = ₹22,500 - ₹7,000 = ₹15,500
- Loss suffered = ₹22,500 - ₹15,500 = ₹7,000

Step 3: Determine Claim Amount

Insurance claim = Lower of (Loss suffered, Insurance cover)
- Loss = ₹7,000
- Insurance cover = ₹30,000
- Claim = ₹7,000

The claim is limited to the actual loss of ₹7,000, which is well within the insurance cover of ₹30,000.

As per insurance loss valuation principles under Indian insurance contract law
PLAN

Write it like this

Time target 9 min

1The skeleton

- Start by reverse-engineering the proper cost price — write 'GP = 25% on sales = ₹7,500; Proper Cost = ₹30,000 − ₹7,500 = ₹22,500' as your very first line, because the examiner is checking whether you know to ignore the ₹20,000 purchase price entirely.
- Label this line clearly as 'Proper/Insurable Cost Price' — don't call it 'adjusted cost' or 'revised cost'; the ICAI phrasing is 'proper cost', and using the right label signals you know the concept.
- State the loss in one clean line — 'Loss suffered = Write-off = ₹7,000' (no long explanation needed; the write-off IS the loss here, and a separate sub-step showing ₹22,500 − ₹15,500 = ₹7,000 confirms it and earns the presentation mark).
- Apply the lower-of rule explicitly — write 'Claim = Lower of Loss (₹7,000) and Policy Amount (₹30,000) = ₹7,000'; examiners deduct marks when you jump to the answer without showing this comparison, even if the number is obvious.
- Box or underline your final claim figure — it takes 2 seconds and ensures the examiner's eye lands on ₹7,000 instantly during a 30-second scan of your answer.

2Examiner-rewarded phrases

“Proper cost of goods destroyed = Sales − Gross Profit at normal GP ratio”“Claim = Lower of (Amount of loss suffered) and (Amount of policy)”“Ascertainment of loss of stock destroyed”

3Common trap

Don't fall for this

Most students plug in the original purchase price of ₹20,000 directly and never work backward from the selling price — this kills your Step 1 entirely and cascades wrong. The ₹20,000 is a red herring; the question gives you GP% on sales specifically so you reverse-engineer the proper cost.

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Q.c 05 marks medium Hire Purchase System - Asset Acquisition ⚡ Try this Q →
An Engineer purchased a machine on hire purchase system. As per the terms he is required to pay ₹ 1,40,000 down, ₹ 1,06,000 at the end of first year, ₹ 98,000 at the end of the second year, ₹ 87,000 at the end of the third year and ₹ 55,000 at the end of fourth year, interest charged @12% p.a. You are required to calculate total cash price of the machine and the interest paid with each installment.
CTTP

Worked Solution

✓ Verified

Hire Purchase — Finding Cash Price and Interest Allocation

Under the Hire Purchase System, interest is charged on the outstanding cash price balance (diminishing balance method). To find the total cash price, we work backwards from the last installment, since after the final payment the balance must become zero.

Working Backwards to Determine Cash Price:

Let the balance outstanding at the beginning of each year be B1, B2, B3, and B4 respectively (i.e., balance after paying the down payment / previous installment).

Since each year's opening balance grows by 12% and the installment is deducted at year-end:
> Opening Balance × 1.12 = Installment Paid

Year 4: B4 × 1.12 = ₹55,000 → B4 = 55,000 ÷ 1.12 = ₹49,107

Year 3: B3 × 1.12 = B4 + ₹87,000 = 49,107 + 87,000 = 1,36,107 → B3 = 1,36,107 ÷ 1.12 = ₹1,21,524

Year 2: B2 × 1.12 = B3 + ₹98,000 = 1,21,524 + 98,000 = 2,19,524 → B2 = 2,19,524 ÷ 1.12 = ₹1,96,004

Year 1: B1 × 1.12 = B2 + ₹1,06,000 = 1,96,004 + 1,06,000 = 3,02,004 → B1 = 3,02,004 ÷ 1.12 = ₹2,69,646

Total Cash Price = Down Payment + B1 = ₹1,40,000 + ₹2,69,646 = ₹4,09,646

Interest Included in Each Installment:

YearOpening Balance (₹)Interest @12% (₹)Installment (₹)Principal Repaid (₹)
12,69,64632,3581,06,00073,642
21,96,00423,52098,00074,480
31,21,52414,58387,00072,417
449,1075,89355,00049,107
Total76,3543,46,0002,69,646

Verification: Total payments = ₹1,40,000 + ₹3,46,000 = ₹4,86,000. Total Interest = ₹4,86,000 − ₹4,09,646 = ₹76,354 ✓

Conclusion: Total Cash Price of the machine = ₹4,09,646. Total interest paid over the hire purchase period = ₹76,354, allocated as ₹32,358, ₹23,520, ₹14,583, and ₹5,893 for Years 1 through 4 respectively.

PLAN

Write it like this

Time target 9 min

1The skeleton

- State the backward-working logic upfront — write one line like 'Since final balance must be zero, cash price is determined by discounting installments backwards at 12%' so the examiner knows you understand the method before seeing any numbers.
- Show your B4 → B3 → B2 → B1 chain clearly — each step on its own line with the formula 'B × 1.12 = next balance + installment', because examiners award step marks even if your final figure is off.
- Add Cash Price = Down Payment + B1 as a boxed line — don't bury it inside working; surface it explicitly so the examiner can tick it without hunting.
- Present interest allocation in a columnar table — Opening Balance | Interest @12% | Installment | Principal columns, because ICAI's suggested answer uses exactly this structure and examiners match format visually.
- Close with the cross-verification — 'Total Payments − Cash Price = Total Interest' in one line; this signals you know the internal check and picks up the last half-mark most students leave on the table.

2Examiner-rewarded phrases

“interest is charged on the outstanding cash price on diminishing balance basis”“working backwards from the last installment, since the balance outstanding after the final installment is nil”“total cash price = down payment + balance outstanding at the commencement of hire purchase agreement”

3Common trap

Don't fall for this

Most students divide the total interest equally across years or just show interest = installment × rate — that's simple interest logic, not hire purchase. You must apply 12% only on the opening cash price balance each year, which keeps shrinking, so each year's interest figure must be different and decreasing.

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Q.d 04 marks medium Pre and Post Incorporation Expenses - Apportionment ⚡ Try this Q →
Ltd was incorporated on 10th November 2020 to take over the existing business of proprietorship firm of Mr. X. The various expenses debited to the profit and loss Account for the year 2020-21 included: (i) Directors fees (ii) Preliminary expenses written off (iii) Salaries and general expenses (iv) Statutory Audit fees (v) Tax Audit fees u/s 44 AB of the Income Tax Act, 1961 (vi) Commission to travelling agents (vii) Sale promotion expenses (viii) Advertisement expenses (ix) Rent expenses (x) Bad debts. You are required to determine the basis of apportionment of above expenses between pre incorporation and post incorporation periods.
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Worked Solution

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Ltd was incorporated on 10th November 2020, requiring apportionment of 2020-21 expenses between pre-incorporation (proprietorship) and post-incorporation (company) periods. The basis of apportionment for each expense is as follows:

Entirely Pre-incorporation Expenses (Not charged to company P&L):

Preliminary Expenses: These are capitalized as intangible assets under Ind AS 38 and represent costs of incorporation (registration, legal, professional fees). They must not be charged to P&L but capitalized and amortized over 5 years or written off from capital.

Entirely Post-incorporation Expenses (Wholly chargeable to company):

Directors Fees: Directors can only be appointed after incorporation. This is entirely post-incorporation.

Statutory Audit Fees: Audits under Section 143 of the Companies Act, 2013 are mandatory only for incorporated companies. These are entirely post-incorporation.

Expenses to be Apportioned on Time Basis (Number of Days):

Salaries and General Expenses, Rent Expenses, Sale Promotion Expenses, and Advertisement Expenses: These are operating expenses that benefit both periods proportionally. Time basis (number of days) is the most rational and objective method. Calculate the proportion of days in each period from the total period under consideration.

Apportionment on Causative Basis:

Commission to Travelling Agents: This is directly linked to sales volume. Apportion on the basis of sales made during each period (pre and post incorporation), or alternatively, on time basis if sales data is not segregated.

Bad Debts: These relate to credit extended during each period. Apportion on the basis of credit sales ratio during pre and post incorporation periods. Alternatively, time basis may be used if segregation is not possible.

Tax Audit Fees u/s 44 AB of the Income Tax Act, 1961: These depend on whether the proprietorship business and the company separately exceeded the turnover limit of ₹10 crores (currently). If both periods are liable, apportion on the basis of turnover in each period. If only one period is applicable, it is wholly chargeable to that period.

General Principle: Pre-incorporation expenses should not be charged to the company's P&L account. They are either capitalized as preliminary expenses or adjusted against capital. For apportionable expenses, the causative factor (sales, usage, or time) determines the allocation to match revenues and expenses appropriately per the matching principle under Ind AS 8.

Section 143 of the Companies Act 2013Section 44 AB of the Income Tax Act 1961Ind AS 38 (Intangible Assets)Ind AS 8 (Accounting Policies, Changes in Accounting Estimates and Errors)Companies Act 2013 - Preliminary Expenses provisions
PLAN

Write it like this

Time target 7 min 12 sec

1The skeleton

- Start with a 3-category classification header — label your answer as 'Entirely Pre', 'Entirely Post', and 'Time/Causative Basis' before listing items; examiners scan for structure and award presentation marks before even reading the content.
- Directors Fees + Statutory Audit Fees → Entirely Post-incorporation — state in one line that these can only arise after the company legally exists; the WHY is the mark, not just the label.
- Preliminary Expenses → Capitalize, NOT charge to P&L — write explicitly that these are 'capitalized and written off from Share Premium or Capital Reserve'; if you just say 'pre-incorporation' without this, you drop a mark.
- Group the time-basis expenses together — Salaries, Rent, Advertisement, Sales Promotion all go under one head with the reason: 'accruing evenly over time, apportioned on number of days'; listing them separately wastes 90 seconds and earns the same marks.
- Commission + Bad Debts + Tax Audit Fees → Causative Basis — link each to its driver: Commission → sales ratio, Bad Debts → credit sales ratio, Tax Audit Fees → turnover in each period; the driver is the mark, not just saying 'causative basis'.

2Examiner-rewarded phrases

“apportioned on the basis of time i.e., number of days in pre and post-incorporation periods”“entirely post-incorporation as such expenses can only be incurred after the date of incorporation”“on the basis of turnover/sales made during pre and post-incorporation periods respectively”

3Common trap

Don't fall for this

Heads up — most students put Directors Fees on 'time basis' thinking it's a recurring expense. It's a trap: directors don't exist before incorporation, so it's 100% post-incorporation. Write the legal reason explicitly or you lose the mark even if your instinct was half-right.

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Q.1 05 marks medium AS-7 Construction Contracts ⚡ Try this Q →
The following data is provided for M/s. Raj Construction Co. (i) Contract Price - ₹ 85 Lakhs (ii) Materials issued - ₹ 2 Lakhs out of which Materials costing ₹ 4 Lakhs is still lying unused at the end of the period (iii) Labour Expenses for workers engaged at site - ₹ 16 Lakhs (out of which ₹ 1 Lakh is still unpaid) (iv) Specific Contract Costs - ₹ 5 Lakhs (v) Sub-Contract Costs for work executed - ₹ 7 Lakhs; Advances paid to Subcontractors - ₹ 4 Lakhs (vi) Further Cost estimated to be incurred to complete the contract - ₹ 35 Lakhs You are required to compute the Percentage of Completion, the Contract Revenue and Cost to be recognized as per AS-7.
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Q.1 05 marks hard AS-24 Discontinuing Operations ⚡ Try this Q →
Case: Rohini Limited case on discontinuing passenger car division and strategic restructuring.
Rohini Limited is in the business of manufacture of passenger cars and commercial vehicles. The Company is working on a strategic plan to close the production of passenger cars and to produce only commercial vehicles over the coming 5 years. However no specific plans have been drawn up for the sale of neither the division nor its assets. As part of its perspective plan it will reduce the production of passenger cars by 20% annually. It also plans to establish another new factory for the manufacture of commercial vehicles and transfer surplus employees in a planned manner.
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Q.1 50 marks very hard Trading and Profit & Loss Account, Balance Sheet, Cash Book ⚡ Try this Q →
You are furnished with following information: (1) His sales for the year ended 31st March, 2021 were 20% higher than the sales of previous year, out of which 20% sales was cash. Total Sales during the year 2019-20 were ₹ 6,25,000 (2) Payments for all the purchases were made by cheque only. (3) Goods were sold for cash and credit both. Credit constitutes 20% of the cheques only. (4) Depreciation on furniture is to be charged 10% p.a. (5) Arm sent to the Bank, the collection of the remitted on the last date of each month after paying salary of ₹ 2,500 to the clerk, office expenses ₹1,500 and personal expenses ₹ 625. Analysis of bank pass book for the year ending 31st March, 2021: Payment to creditors: ₹ 3,75,000 Payment to rent up to 31st March, 2021: ₹ 20,000 Cash deposited into bank during the year: ₹ 1,00,000 The following are the balances on 31st March, 2021: Stock: ₹ 3,00,000 Debtors: ₹ 1,50,000 Creditors for goods: ₹ 1,82,500 On the evening of 31st March, 2021, the cashier absconded with the available cash in the cash book. You are required to prepare Trading and Profit and Loss A/c. for the year ended 31st March, 2021 and Balance Sheet as on that date. All the working should form part of the answer.
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Q.2 08 marks hard Inventory Valuation - AS 2 ⚡ Try this Q →
Ivy Ltd purchased 20,000 kilogramms of Raw Material @ ₹ 20 per kilogramm during the year 2020-21. They have furnished you with the following further information for the year ended 31st March, 2021: Opening Inventory: Finished Goods 2,000 units @ ₹ 1,00,000; Raw Materials 2,200 units @ ₹ 44,000; Direct Labour ₹ 3,06,000; Fixed Overheads ₹ 3,00,000; Sales 20,000 units @ ₹ 11,20,000; Closing Inventory: Finished Goods 2,400 units; Raw Materials 1,800 units. The plant has a capacity to produce 30,000 Units of finished product per annum. However, the actual production of finished products during the year 2020-21 was 20,400 Units. Due to a fall in the market demand, the price of the finished goods in which the raw material has been utilized is expected to be sold @ ₹ 40 per unit. The replacement cost of the raw material was ₹ 19 per kilogramm. You are required to ascertain the value of closing inventory as at 31st March, 2021 as per AS 2.
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Q.2.a 15 marks very hard Equity Share Buyback / Companies Act, 2013 / Capital Reducti ⚡ Try this Q →
A company provides the following 2 possible Capital Structures as on 31st March, 2021: | Particulars | Situation 1 (₹) | Situation 2 (₹) | |---|---|---| | Equity Share Capital (Shares of ₹ 10 each, fully paid up) | 30,00,000 | 30,00,000 | | Reserves & Surplus | | | | — General Reserve | 12,00,000 | 12,00,000 | | — Securities Premium | 6,00,000 | 6,00,000 | | — Profit & Loss | 2,10,000 | 2,10,000 | | — Statutory Reserve | 4,20,000 | 4,20,000 | | Loan Funds | 25,00,000 | 1,20,00,000 | The company is planning to offer buy back of Equity Share at a price of ₹ 30 per equity share. You are required to calculate maximum permissible number of equity shares that can be bought back in both the situations as per Companies Act, 2013 and are also required to pass necessary Journal Entries in the situation where the buyback is possible.
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Q.3(a) 15 marks very hard Partnership Amalgamation ⚡ Try this Q →
A Partnership firm C & Co. consists of partners P and Q sharing Profits and Losses in the ratio of 4 : 1. The firm H & Co. consists of Partners Q and R sharing Profits and Losses in the ratio of 1 : 2. On 31st March, 2021, it was decided to amalgamate both the firms and form a new firm CH & Co., wherein P, Q and R would share Profits and Losses in the ratio of 6 : 3 : 1. The summarised Balance Sheets of both the firms as on 31st March, 2021 were as follows: [Liabilities: C & Co. (Capital P 600, Q 400, R —, Reserve 200, Creditors 480, Total 1,680) and H & Co. (600, 300, 200, 150, 220, 870); Assets: C & Co. (Cash in hand/bank 160, Debtors 240, Stock 200, Vehicles —, Machinery 480, Building 600, Total 1,680) and H & Co. (120, 320, 80, 350, —, —, 870)]. The following were the terms of amalgamation: (i) Goodwill of C & Co. was valued at ₹ 2,80,000 and the Goodwill of H & Co. was valued at ₹ 1,60,000. Goodwill account is not to be opened in the books of the new firm but is to be adjusted through the Capital accounts of the partners. (ii) Building, Machinery and Vehicles are to be taken over at ₹ 8,00,000, ₹ 4,00,000 and ₹ 3,00,000 respectively. (iii) Provision for doubtful debts is ₹ 20,000 in respect of C & Co. and ₹ 10,000 in respect of H & Co. are to be provided. You are required to: (i) Show how the Goodwill value will be adjusted amongst the partners. (ii) Prepare the Balance Sheet of CH & Co as at 31st March, 2021 by keeping Partner's capital in their profit sharing ratio taking 'Q' as the basis. The excess of deficiency to be kept in the respective Partner's Current Accounts.
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Q.3(b) 05 marks medium NBFC Provision Calculation ⚡ Try this Q →
Shaktiman Pvt Financiers Limited is a NBFC providing Finance for purchasing of Auto Rickshaws. The following information is extracted from its books for the year 31st March, 2021: Interest Overdue but not recognised in Profit and Loss Account (Period Overdue: Up to 12 Months ₹ 750.00 Crore, Up to 24 Months ₹ 200.00 Crore, For 30 Months ₹ 200.00 Crore, For 45 Months ₹ 250.00 Crore, For 60 Months ₹ 500.00 Crore); Net Book Value of Assets Outstanding (₹ In crore) (30,000, 4,000, 3,750, 3,000, 10,000 respectively). You are required to calculate the amount of provision to be made.
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Q.3.c 05 marks medium AS-4 / Contingent Liabilities and Events Occurring After Bal ⚡ Try this Q →
Case: Surya Limited follows the financial year from April to March. It has provided the following information: (i) A suit against the Company's Advertisement was filed by a party on 29th April 2021, claiming damages of ₹ 5 lakhs. (ii) Company sends a proposal to sell an immovable property for ₹ 45 lakhs in March 2021. The book value of the property is ₹ 30 lakhs as on year end date. However, the Deed was registered on 15th April, 2021. (iii) The terms and conditions for acquisition of business of another company have been decided by the end of March 2021, but the financial resources were arranged in…
Keeping in view the provisions of AS-4, you are required to state with reasons whether the above events are to be treated as Contingencies, Adjusting Events or Non-Adjusting Events occurring after the Balance Sheet date.
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Q.4 20 marks very hard Accounting Standards - Government Grants (AS-12) and Cash Fl ⚡ Try this Q →
M/s Gamma Limited received the following Loans/Grants and made transactions during the financial year ended 31st March, 2021: (a) Loan received from the Central Government on privatisation of Effusion Transport Plan (b) Loan received from State Government for providing Medical facilities to be used during the pandemic
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Q.4.ii 00 marks easy AS 18 / Related Party Disclosures ⚡ Try this Q →
Case: Khushi Limited entered into an agreement with Mr. Happy for running a business for a fixed amount payable to the later every year. The contract states that the day-to-day management of the business will be handled by Mr. Happy, while all financial and operating policy decisions are taken by the Board of Directors of the Company. Mr. Happy does not own any voting power in Khushi Limited. Shri Bhanu, a relative of key management personnel, received remuneration of ₹ 1,50,000 for his services in the company for the period from 1st April, 2020 to 30th June, 2020. On 1st July, 2020, he left the se…
You are required to suggest how the above transactions will be treated as at the closing date i.e. 31st March, 2021 for the purpose of AS 18-Related Party Disclosures.
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Q.5(a) 10 marks hard Departmental Accounting - Trading and Profit & Loss Account ⚡ Try this Q →
The firm, M/s K. Creations has two Departments, Dyed fabric and Readymade garments. Readymade garments are sold by the firm itself. Dyed fabric and readymade garments have independent markets. Some of readymade garments department's requirement is fulfilled by Dyed Fabric Department at its usual selling price. You are liable to prepare Departmental Trading and Profit & Loss Account for the year ended 31st March 2021. Data: Opening stock as on April 1, 2020: Dyed Fabric ₹ 2,40,000, Readymade ₹ 1,20,000; Purchases: Dyed Fabric ₹ 20,12,000, Readymade ₹ 1,50,00,000; Sales: Dyed Fabric ₹ 31,06,000, Readymade ₹ 3,12,50,000; Transfer to Readymade: ₹ 3,00,000; Carriage outward: Dyed Fabric ₹ 3,00,000, Readymade ₹ 67,30,000; Direct expenses: Dyed Fabric ₹ 1,00,000, Readymade ₹ 19,50,000; Plant and Equipments (WDV): Dyed Fabric ₹ 5,00,000, Readymade ₹ 15,00,000; Rent and warehousing: Dyed Fabric ₹ 4,50,000, Readymade ₹ 12,00,000; Stock as on March 31, 2021: Dyed Fabric ₹ 6,00,000, Readymade ₹ 22,50,000
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Q.5(b)(i) 05 marks medium Equity Shares with Differential Rights ⚡ Try this Q →
Explain the meaning of Equity Shares with Differential Rights. Whether Equity Share be also issued with differential voting?
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Q.5(b)(ii) 05 marks medium Voting Rights Calculation ⚡ Try this Q →
In Jugnu Limited A, B, C and D hold equity share capital in the proportion of 30:30:30:10 and M, N, O and P hold preference share capital in proportion of 40:20:10:10. You are required to calculate their voting rights in case of resolution of doubling up of the company, if the paid up Equity Share Capital of the company is ₹ 100 Lakhs and Preference Share Capital is ₹ 50 Lakhs.
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Q.5a 10 marks hard Branch accounting ⚡ Try this Q →
Mahabir of Mohali ran a branch at Noida in which the goods are supplied from Mohali but the cost thereof is situated in the Head Office books. On 31st March, 2020 the Branch Balance Sheet was as follows: Liabilities: Creditors Balance ₹62,000, Head Office ₹1,88,000. Assets: Debtors Balance ₹2,54,000, Building Extension A/c Closed by transfer to H.O A/c, Cash at Bank ₹26,000. Total: ₹2,50,000.
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Q.5b 10 marks hard Business accounting ⚡ Try this Q →
Mr. Arun runs a business of readymade garments. He closes the books of accounts on 31st March. The Balance Sheet as on 31st March, 2020 was as follows: Capital A/c ₹5,05,000 Furniture ₹50,000, Creditors ₹1,02,500 Closing Stock ₹3,50,000, Debtors ₹1,25,000, Cash in Hand ₹55,000, Cash at Bank ₹47,500. Total: ₹6,07,500.
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Q.6 20 marks very hard ⚡ Try this Q →
Answer any four of the following:
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Q.6 05 marks medium Investment accounting, AS 13 valuation ⚡ Try this Q →
Real investments have been classified as Current investment in the books of Mr. Z. On 15th May 2021, Mr Z decides to exclusively investment in equity shares of Y Ltd. as Long term investment. On 15th May 2021, the shares were quoted in the stock exchange at ₹ 130.
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Q.6 20 marks very hard Trial Balance, Financial Statements Preparation ⚡ Try this Q →
The following is the Trial Balance of H Ltd., as on 31st March, 2021: | Particulars | Dr (₹) | Cr (₹) | |---|---|---| | Equity Capital (Shares of ₹ 100 each) | | 8,05,000 | | 9,000 equity shares of ₹ 100 each | | 9,00,000 | | 9% Debentures | | 4,00,000 | | General Reserve | | 40,00,000 | | Profit b/fd. (of previous year) | | 22,800 | | Sales | | 60,20,000 | | Trade Payables | | 10,40,000 | | Provision for Depreciation on Plant & Machinery | | 1,32,000 | | Suspense Account | | 40,000 | | Land at cost | 24,00,000 | | | Plant & Machinery at cost | 7,70,000 | | | Trade Receivables | 19,60,000 | | | Inventories (31-03-2020) | 3,50,000 | | | Bank | 2,30,800 | | | Advanced Purchases | 2,32,100 | | | Factory Expenses | 15,00,000 | | | Administration Expenses | 3,00,000 | | | Selling Expenses | 14,00,000 | | | Discount Interest | 36,000 | | | Goodwill | 12,50,000 | | | Total | 1,30,29,800 | 1,30,29,800 |
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Q.6(a) 05 marks medium Physical Capital Maintenance Concept ⚡ Try this Q →
A trader commenced business on April 1, 2020 with ₹ 1,20,000, represented by 6000 units of a certain product at ₹ 20 per unit. During the year 2020-21 he sold those units at ₹ 30 per unit and had withdrawn ₹ 60,000. The price of the product at the end of financial year is ₹ 25 per unit. Compute retained profit under the concept of physical capital maintenance at current cost. Also state, whether answer would be different if the trader had not withdrawn any amount.
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Q.7 10 marks hard Branch accounting, journal entries ⚡ Try this Q →
During the six months ending on 30-09-2020, the following transactions took place at Noida: Sales ₹2,78,000, Purchases ₹64,500, Wages Paid ₹24,000, Salaries (inclusive of advance) ₹15,600, General Expenses ₹7,800, Fire Insurance (Paid for one year) ₹11,300, Remittance to H.O. ₹32,000. Manager's salary ₹16,890, Collections from customers ₹2,27,000, Discount allowed ₹16,999, Discount earned ₹4,600, Cash paid to creditors ₹88,500, Building Accounts ₹14,000, Further payments ₹5,000, Cash in Hand ₹47,600.
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Q.11 10 marks very hard Amalgamation of Companies, Bank Accounting ⚡ Try this Q →
Ignore income-tax. You are required to: (i) Compute No. of shares to be issued by Black Limited to White Limited against purchase consideration. (ii) Calculate the balance of Net Current Assets of Black Limited and White Limited as on 1st July, 2020. (iii) Give balance of Profit or Loss of Black Limited as on 1st July, 2020. (iv) Give balance of Property Plant and Equipment as on 1st July, 2020 after takeover. (b) The following are the figures extracted from the books of New Bank Limited as on 31.12.2021: Interest and Discount received: ₹ 48,11,200 Interest paid on Deposits: ₹ 2,25,200 Salaries and allowances: ₹ 8,40,510 Issued and subscribed capital: ₹ 16,00,000 Commission, Exchange and Brokerage received: ₹ 1,45,000 Postage and Telegram: ₹ 60,000 Statutory Reserve Fund: ₹ 8,00,000 Interest on cash credit: ₹ 2,65,000 Profit on sale of Investments: ₹ 1,15,000 Depreciation on Bank's Property: ₹ 40,000 Interest on Overdraft: ₹ 1,20,000 Rent Received: ₹ 65,000 Auditors Fees: ₹ 5,000 Statutory Expenses: ₹ 38,000
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Q.11(2)(b) 18 marks very hard Debentures and Convertible Securities ⚡ Try this Q →
AB Limited (a listed company) recently made a public issue in respect to the following information is available: (i) No. of parity convertible 8% debentures issued 3,00,000, face value and issue price ₹ 100 per debenture. (ii) Convertible portion per debenture 60%, date of conversion at expiry of 7 months from the date of closing of issue. (iii) Date of closure of subscription 1-6-2020, date of allotment 1-6-2020, rate of interest on debenture 8% payable from the date of allotment, market value of equity share as on date of conversion ₹ 80 (Face Value ₹ 10). (iv) Underwriting Commission 1% (v) No. of debentures applied for 2,50,000. (vi) Interest payable on debentures half-yearly on 30th September and 31st March. Write relevant journal entries for all transactions arising out of the above during the year ended 31st March, 2021 (including cash and bank entries).
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Q.12 00 marks easy Bank Accounting, Profit and Loss Account, Provisions and Adj ⚡ Try this Q →
Case: Bank P&L Account preparation with adjustments for provisions, income tax, dividends, and reserves using data from Question 11(b)
The following information is also given: (i) A customer to whom a sum of ₹ 5 Lakhs was advanced has become insolvent and it is expected that only 50% can be recovered from his estate. (ii) Make necessary provisions on Risk Assets: Standard (excluding above ₹ 5,00,00) ₹ 10,00,000; Sub-Standard (fully secured) ₹ 8,20,000; Doubtful assets covered by security for 1 year ₹ 40,000; Loss assets ₹ 1,00,000 (iii) Provide ₹ 6,50,000 for Income Tax. (iv) The directors desire to declare 10% dividend. (v) 25% of profit is to be transferred to Reserve fund. (vi) Rebate on Bills discounted on 31.03.2020 was ₹ 20,000 and ₹ 15,000 on 31.03.2021. You are required to prepare Profit & Loss A/c of New Bank Limited for the year ended 31.03.2021.
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Q.16(e) 00 marks easy Company Reconstruction - Journal Entries ⚡ Try this Q →
Case: Sagra Limited has laid down the following terms upon the sanction of the reconstruction scheme by the court. (i) The shareholders to receive in lieu of their present holding at 750,000 shares of ₹ 10 each, the following: - New fully paid ₹ 10 Equity Shares equal to 3/5th of their holding. - Fully paid ₹ 10 6% Preference Shares to the extent of 2/5th of the above equity shares. - 7% Debentures of ₹ 250,000. (ii) Goodwill will stand at ₹ 270,000 is to be completely written off. (iii) Plant & Machinery to be reduced by ₹ 1,00,000, Furniture to be reduced by ₹ 88,000 and Building to be apprecia…
You are required to show the necessary Journal Entries in the books of Sagra Limited of the above reconstruction scheme considering that balance in General Reserve is utilized to write off the losses.
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Q.19(d) 00 marks easy Employee Stock Option Plan - Compensation Expenses ⚡ Try this Q →
At the beginning of the year 1, Harmony Limited granted 6000 options to each of its 1000 employees. The contractual life of option granted is 6 yrs. Other relevant information is as follows: Vesting Period: 3 years Exercise period: 3 years Expected Life: 5 years Exercise Price: ₹ 100 Market Price: ₹ 100 Expected Forfeitures per year: 3% The option granted vest according to a graded schedule of 25% at the end of the year 1, 25% at the end of the year 2 and the remaining 50% at the end of the year 3. You are required to calculate total compensation expenses for the options expected to vest and cost and cumulative cost to be recognized at the end of all the three years assuming that expected forfeiture rate does not change during the vesting period when the Intrinsic value of the options at the grant date is ₹ 7 per options.
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Q.161 16 marks very hard Bonus shares, Capitalization of reserves, Journal entries, S ⚡ Try this Q →
Following is the extract of the Balance Sheet of K Ltd (listed company) as at 31st March, 2020: Authorised capital: 1,00,000 Equity shares of ₹ 10 each: ₹ 30,00,000 Issued and Subscribed capital: 2,00,000 Equity shares of ₹ 10 each, ₹ 8 paid up: ₹ 16,00,000 Reserves and surplus: General Reserve: ₹ 3,60,000 Capital Redemption Reserve: ₹ 1,20,000 Securities premium (not realised in cash): ₹ 75,000 Profit and Loss Account: ₹ 6,00,000 On 1st April, 2020, the Company has made final call of ₹ 2 each on 2,00,000 equity shares. The call money was received by 25th April, 2020. Thereafter, the company decided to capitalise its reserves by way of bonus at the rate of one share for every four shares held. Show necessary entries in the books of the company and prepare the extract of the Balance Sheet immediately after bonus issue.
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