Question 1

M/s. Zed Laptop Co. has a hire-purchase department and goods are sold on hire-purchase adding 25% to cost. From the given information, prepare Hire-Purchase Trading Account for the year ending March 31, 2013 with opening goods with customers of ₹80,000, goods sold on hire-purchase of ₹4,00,000, cash received of ₹3,00,000, and outstanding instalments of ₹10,000.

Accepted Answer

**(a) Hire-Purchase Trading Account for the year ending 31st March 2013**

Goods are sold at **cost + 25%**, so Cost = 100/125 = **4/5 of HP price**.

Closing Goods with Customers (HP price) = Opening + Goods Sold − Cash Received − Outstanding Instalments = ₹80,000 + ₹4,00,000 − ₹3,00,000 − ₹10,000 = **₹1,70,000**.

**Hire-Purchase Trading Account**

| Dr | ₹ | Cr | ₹ |
|---|---|---|---|
| To Opening Goods with Customers (at cost) ₹80,000 × 4/5 | 64,000 | By Cash Received | 3,00,000 |
| To Goods Sent on HP (at cost) ₹4,00,000 × 4/5 | 3,20,000 | By Outstanding Instalments | 10,000 |
| To Profit transferred to P&L A/c | 62,000 | By Closing Goods with Customers (at cost) ₹1,70,000 × 4/5 | 1,36,000 |
| **Total** | **4,46,000** | **Total** | **4,46,000** |

**Profit on Hire-Purchase business = ₹62,000**

---

**(b) Journal Entries — M/s. Big Systematic Ltd. (Self-Balancing Ledgers)**

Under self-balancing ledgers, each transaction requires entries in both the **General Ledger (GL)** (via a Ledger Control/Adjustment Account) and the **Subsidiary Ledger** (via a GL Adjustment Account).

**Error (i): ₹8,700 received from Mehra was credited to Mehta**
This is a personal account misallocation within the Debtors Ledger. The GL Control Account total is unaffected. Rectification is only in the **Debtors Ledger**:

Mehta's A/c Dr ₹8,700 / To Mehra's A/c ₹8,700
*(No entry in General Ledger)*

**Error (ii): Sales Book for December 2012 undercast by ₹1,000**
The GL total (Control A/c and Sale…

Question 2

P, Q and R were carrying on a business in partnership, sharing profits and losses in ratio 5:3:2. The firm earned profit of ₹3,60,000 for year ended 31st March 2012. P died on 31st August 2012. According to partnership deed: (i) Assets and Liabilities to be revalued. (ii) Goodwill calculated at two years' purchase of average profits for last three completed accounting years. (iii) Deceased partner's share in profits calculated on previous year's basis. Post death, Q & R share profit in ratio 3:2. P's sole heir received ₹5,00,000 immediately and balance with interest @ 12% p.a. on 31st March 2013. Prepare Revaluation Account, P's Capital Account and P's Heir Account with important working notes.

Accepted Answer

**Note:** The question as stated does not provide opening capital balances, individual asset/liability revaluation figures, or profits for the two preceding years (2009-10 and 2010-11). The solution below presents the complete methodology, calculates every figure derivable from the given data, and uses clearly labelled assumptions where source data is absent. In an actual exam, these figures would appear in an accompanying balance sheet and profit summary table.

**Working Note 1 – Goodwill Calculation**

Goodwill = 2 × Average profit of last 3 completed accounting years. The last three completed years before P's death (31 August 2012) are 2009-10, 2010-11, and 2011-12. Only the 2011-12 profit (₹3,60,000) is provided in this extract. The question requires profits for all three years; assuming the examiner's data gives an average of ₹3,60,000 (i.e., assume all three years = ₹3,60,000 each, OR use the figure supplied in the full question):

Goodwill = 2 × ₹3,60,000 = **₹7,20,000**

P's share of goodwill = 5/10 × ₹7,20,000 = **₹3,60,000** → credited to P's Capital A/c
Q and R bear this in their **gaining ratio**:
- Gaining ratio = New share – Old share → Q: 3/5 – 3/10 = 3/10; R: 2/5 – 2/10 = 2/10
- Debited to Q's Capital: 3/10 × ₹7,20,000 = ₹2,16,000
- Debited to R's Capital: 2/10 × ₹7,20,000 = ₹1,44,000

**Working Note 2 – P's Share in Profit up to Date of Death**

Basis: Previous year's profit (2011-12) = ₹3,60,000 (time-proportion basis)
Period: 1 April 2012 to 31 August 2012…

Question 3

The Balance Sheet of M/s. Cube Limited as on 31-03-2013 shows Reserves & Surplus debit balance of ₹261 lakh. The Board decided upon a scheme of internal reconstruction including: revaluation of shares, waiver of dividends in arrears, debenture settlement with property, asset write-offs, investments sale, and loan waiver. You are required to: (a) Pass Journal Entries for all internal reconstruction transactions. (b) Prepare Reconstruction Account. (c) Prepare notes on Share Capital and Tangible Assets to Balance Sheet immediately after implementation.

Accepted Answer

**Note:** The question references the Balance Sheet of Cube Limited but the specific figures for each line item were not provided in the question as presented. The solution below uses **assumed illustrative figures** consistent with the ₹261 lakh accumulated loss figure stated, following standard CA Intermediate internal reconstruction methodology. Students should substitute actual figures if provided in the full question.

**Assumed Balance Sheet of Cube Limited as on 31-03-2013 (₹ in Lakhs):**

Liabilities: 8% Cumulative Preference Share Capital — 1,000 shares @ ₹100 = **₹100 lakh**; Equity Share Capital — 4,000 shares @ ₹100 = **₹400 lakh**; 12% Debentures = **₹200 lakh**; Bank Loan = **₹80 lakh**; Trade Payables = **₹50 lakh**; Total = **₹830 lakh**.

Assets: Goodwill = **₹80 lakh**; Land & Buildings = **₹120 lakh**; Plant & Machinery = **₹200 lakh**; Investments = **₹50 lakh**; Debtors & Stock = **₹119 lakh**; Profit & Loss A/c (Dr. balance) = **₹261 lakh**; Total = **₹830 lakh**.

**Additional disclosure:** Preference dividend in arrears for 3 years = 8% × ₹100 lakh × 3 = **₹24 lakh**.

**Scheme of Internal Reconstruction:**
1. Equity share face value reduced from ₹100 to ₹25 per share.
2. Preference dividend arrears of ₹24 lakh waived by preference shareholders.
3. 12% Debentures (₹200 lakh) fully settled by transfer of Land & Buildings at agreed value of ₹120 lakh — gain of ₹80 lakh credited to Reconstruction Account.
4. Goodwill written off entirely (₹80 lakh).
5. In…

Question 4

A sole trader requests you to prepare his Trading and Profit & Loss Account for the year ended 31st March 2013 and Balance Sheet as at that date. He provides Statement of Affairs as at 31st March 2012, assets and liabilities position on 31st March 2013, and a summary of cash transactions. Depreciate Furniture @ 5%, Computer @ 10%, Mobile Phone @ 25%. Create provision for bad debts @ 5% on Trade Debtors. No additions or sales of fixed assets occurred during the year.

Accepted Answer

**Note:** The question refers to specific figures (Statement of Affairs, assets/liabilities, cash summary) that were not provided in the question text. The following answer demonstrates the complete methodology, format, and adjustments required for such a question. A student with the actual figures should plug them into this framework to score full marks.

**Step 1 — Determine Opening and Closing Capital (Statement of Affairs Approach)**

Since the trader follows single-entry bookkeeping, profit is determined by comparing capital at the beginning and end of the year. From the **Statement of Affairs as at 31st March 2012**, Opening Capital = Total Assets − Total Liabilities. Similarly, Closing Capital = Closing Assets − Closing Liabilities (from 31st March 2013 position). Adjusted Profit = Closing Capital − Opening Capital + Drawings − Additional Capital Introduced.

**Step 2 — Reconstruct Total Sales and Purchases using Cash Summary**

From the cash transaction summary, identify cash sales, cash purchases, payments to creditors, and receipts from debtors. Use the following:
- **Total Purchases** = Cash Purchases + Credit Purchases (Credit Purchases = Opening Creditors + Payments to Creditors − Closing Creditors)
- **Total Sales** = Cash Sales + Credit Sales (Credit Sales = Opening Debtors + Receipts from Debtors − Closing Debtors)

**Step 3 — Trading Account for the year ended 31st March 2013**

The Trading Account is debited with: Opening Stock, Purchases (net of returns), D…

Question 5

A sports club provides Receipts and Payments Account, Income and Expenditure Account and additional information for the year ended 31st March 2013. Assets and liabilities as on 31st March 2012 include Club Grounds & Pavilion ₹4,40,000, Sports Equipments ₹2,50,000, Furniture & Fixtures ₹40,000, Subscription in Arrear ₹8,000, Subscription received in advance ₹2,000, and Creditors for Printing & Stationery ₹5,000. Prepare the Balance Sheet of the Club as on 31st March 2013.

Accepted Answer

**BALANCE SHEET PREPARATION FOR CLUB – INCOMPLETE QUESTION NOTIFICATION**

The question references a **Receipts and Payments Account** and **Income and Expenditure Account** for the year ended 31st March 2013, along with additional information, but these statements are not provided in the question. Without these essential documents, a complete balance sheet cannot be prepared.

**Required Information Missing:**
To prepare the Balance Sheet as on 31st March 2013, the following are essential:
1. **Receipts and Payments Account** – to identify opening fund balance
2. **Income and Expenditure Account** – to determine surplus/deficit for the year
3. **Additional Information** – including depreciation rates, fixed asset additions, adjustments for accrued expenses/prepaid items, and other closing balances

**Standard Format for Club Balance Sheet (31st March 2013):**

**LIABILITIES SIDE:**
General Fund/Capital Fund (Opening Balance + Surplus/Deficit for the year)
Current Liabilities:
– Subscription received in advance (adjusted)
– Creditors for Printing & Stationery (or updated amount)
– Other payables

**ASSETS SIDE:**
Fixed Assets:
– Club Grounds & Pavilion (less depreciation)
– Sports Equipment (less depreciation)
– Furniture & Fixtures (less depreciation)

Current Assets:
– Subscription in Arrear (adjusted for recoveries)
– Sundry debtors
– Cash/Bank balances
– Stocks

**Opening Balances (31st March 2012) – To be carried forward:**
Fixed Assets: Club Grounds & Pavilion ₹4,40,000…

Question 6

On 1st April 2012, M/s. Power Motors sold on hire purchase basis a truck with cash price ₹9,00,000 to M/s. Singh & Singh. Terms: ₹3,00,000 down payment and six four-monthly instalments of ₹1,00,000 plus 12% p.a. interest on outstanding cash price. Instalments due 31st July, 30th November and 31st March. M/s. Singh & Singh paid on 31st July 2012 but failed on 30th November 2012. Power Motors repossessed truck at ₹7,00,000, spent ₹80,000 on repairs and repainting, and sold it on 7th January 2013 for ₹7,50,000 cash. Prepare account of M/s. Singh & Singh and Goods Repossessed Account in books of M/s. Power Motors.

Accepted Answer

**M/s. Singh & Singh Account** (in the books of M/s. Power Motors)

| Particulars | ₹ | Particulars | ₹ |
|---|---|---|---|
| To HP Truck cost | 9,00,000 | By Down payment (1-4-12) | 3,00,000 |
| To Interest (1st period) | 24,000 | By 1st instalment (31-7-12) | 1,00,000 |
| To Interest (2nd period) | 20,000 | By Goods Repossessed (30-11-12) | 7,00,000 |
| | | By Gain on Repossession | 1,80,000 |
| **9,44,000** | | | **9,44,000** |

**Goods Repossessed Account** (Truck from M/s. Singh & Singh)

| Particulars | ₹ | Particulars | ₹ |
|---|---|---|---|
| To M/s. Singh & Singh A/c (Recovery value) | 7,00,000 | By Repairs & Repainting | 80,000 |
| To Loss on Resale | 30,000 | By Cash (Sale on 7-1-13) | 7,50,000 |
| **7,30,000** | | | **7,30,000** |

**Key Points:**

1. **Interest Calculation:** Interest is computed on the outstanding cash price (price less down payment) for each 4-month period at 12% p.a.

2. **Gain on Repossession:** The repossessed value (₹7,00,000) exceeds the outstanding principal and accrued interest at default (₹5,20,000), creating a gain of ₹1,80,000. This compensates Power Motors for the interest loss on the defaulted 2nd instalment.

3. **Loss on Resale:** After spending ₹80,000 on repairs, the total cost is ₹7,80,000. The sale at ₹7,50,000 results in a loss of ₹30,000, reflecting depreciation and repair costs.

4. **Account Treatment:** Under hire-purchase accounting, the customer account shows the transaction from inception to repossession, capturing all…

Question 7

The promoters of M/s. Glorious Ltd. took over a running business on 1st April 2012. Company incorporated on 1st August 2012. Annual accounts to 31st March 2013 showed total sales of ₹1,600 lakh (sales till 31st July 2012 were ₹400 lakh). Gross profit ratio was 25%. Expenses from 1st April 2012 to 31st March 2013 included: Salaries ₹69 lakh, Rent/Rates/Insurance ₹24 lakh, Office Expenses ₹66 lakh, Travellers' Commission ₹16 lakh, Discounts ₹12 lakh, Bad Debts ₹4 lakh, Directors' Fee ₹25 lakh, Audit Fee ₹9 lakh, Depreciation ₹12 lakh, Debenture Interest ₹11 lakh. Prepare a statement showing calculation of Profits for pre-incorporation and post-incorporation periods.

Accepted Answer

**Statement of Pre-incorporation and Post-incorporation Profits of M/s. Glorious Ltd.**

**Period Identification:**
Business taken over on 1st April 2012; Company incorporated on 1st August 2012; Accounts close 31st March 2013.
- **Pre-incorporation period:** 1st April 2012 to 31st July 2012 = **4 months**
- **Post-incorporation period:** 1st August 2012 to 31st March 2013 = **8 months**

**Basis of Allocation:**
- **Time ratio** (Pre : Post) = 4 : 8 = **1 : 2** → used for fixed/time-based expenses (Salaries, Rent/Rates/Insurance, Office Expenses, Depreciation)
- **Sales ratio** (Pre : Post) = ₹400 : ₹1,200 = **1 : 3** → used for variable/revenue-linked expenses (Travellers' Commission, Discounts, Bad Debts)
- **Post-incorporation only** → Directors' Fee (directors exist only after incorporation), Audit Fee (statutory audit obligation arises only after incorporation), Debenture Interest (debentures can only be issued by a registered company)

**Gross Profit Calculation (@ 25% on sales):**
- Pre-incorporation GP: 25% × ₹400 lakh = ₹100 lakh
- Post-incorporation GP: 25% × ₹1,200 lakh = ₹300 lakh

**Statement of Profits** (₹ in lakh)

| Particulars | Basis | Pre-incorp. | Post-incorp. |
|---|---|---|---|
| **Gross Profit** | Sales ratio | 100 | 300 |
| **Less: Expenses** | | | |
| Salaries | Time (1:2) | 23 | 46 |
| Rent/Rates/Insurance | Time (1:2) | 8 | 16 |
| Office Expenses | Time (1:2) | 22 | 44 |
| Travellers' Commission | Sales (1:3) | 4 | 12 |
| Discounts | Sales (1:3) |…

Question 8

Prepare a Cash Flow Statement for the year ended 31st March 2013 based on: Total sales ₹199 crore (cash sales ₹131 crore); Cash collections from credit customers ₹67 crore; Cash paid to suppliers and employees ₹159 crore; Fully paid preference shares ₹16 crore redeemed and equity shares ₹16 crore allotted at 25% premium; Income tax paid ₹13 crore; Machine (book value ₹21 crore) sold at loss of ₹30 lakhs; New machine installed at ₹40 crore; Debenture interest paid ₹1 crore; Dividends ₹10 crore paid with corporate dividend tax @ 17%; Opening balance with bank and cash ₹9 crore on 31st March 2012.

Accepted Answer

**Cash Flow Statement for the year ended 31st March 2013**
(Prepared as per AS 3 — Cash Flow Statements)

**A. Cash Flow from Operating Activities**

Cash receipts from customers comprise cash sales of ₹131 crore and collections from credit customers of ₹67 crore, totalling **₹198 crore**. Cash paid to suppliers and employees amounts to **₹159 crore**. Cash generated from operations is therefore ₹39 crore. Deducting income tax paid of ₹13 crore, **Net Cash from Operating Activities = ₹26 crore**.

**B. Cash Flow from Investing Activities**

The machine with a book value of ₹21 crore was sold at a loss of ₹0.30 crore (₹30 lakhs), giving sale proceeds of **₹20.70 crore** — this is the actual cash inflow; the loss is a non-cash book adjustment. A new machine was purchased for **₹40 crore** (cash outflow). **Net Cash used in Investing Activities = ₹(19.30) crore**.

**C. Cash Flow from Financing Activities**

Equity shares of ₹16 crore were allotted at a 25% premium, yielding proceeds of ₹20 crore. Fully paid preference shares of ₹16 crore were redeemed, representing a cash outflow. Debenture interest paid was ₹1 crore. Dividends paid were ₹10 crore; corporate dividend tax (CDT) at 17% on ₹10 crore = ₹1.70 crore — total dividend-related outflow = ₹11.70 crore. **Net Cash used in Financing Activities = 20 − 16 − 1 − 11.70 = ₹(8.70) crore**.

**Summary**

| Particulars | ₹ crore |
|---|---|
| Net cash from Operating Activities | 26.00 |
| Net cash used in Investing Activities | (19…

Question 9

What is an Enterprise-Resource Planning (ERP) software? What are the factors which you will take into consideration while choosing an ERP software?

Accepted Answer

**Enterprise Resource Planning (ERP) Software** is an integrated enterprise-wide application software system that consolidates and manages core business processes and data across all functional departments of an organization into a single unified system. ERP systems provide real-time visibility, control, and integration of business operations including finance, human resources, supply chain, inventory, manufacturing, sales, and customer relationship management through a centralized database. It eliminates information silos and enables informed decision-making across the organization.

**Factors to Consider While Choosing ERP Software:**

**1. Alignment with Business Requirements:** The ERP must align with the organization's current and future business needs, strategic objectives, and operational processes. It should support the organization's growth plans and scalability requirements.

**2. Cost Considerations:** Evaluate total cost of ownership including software licensing fees, implementation costs, customization charges, training expenses, and ongoing maintenance and support costs. Compare cost-benefit over the implementation period.

**3. Technical Feasibility:** Assess compatibility with existing IT infrastructure, hardware and network requirements, operating systems, database compatibility, and ability to integrate with current legacy systems without disruption.

**4. Vendor Credibility and Support:** Evaluate the vendor's reputation, financial stability, market presenc…

Question 10

What are the three fundamental accounting assumptions recognised by Accounting Standard (AS) 1? Briefly describe each one of them.

Accepted Answer

**AS 1 recognises three fundamental accounting assumptions:**

**1. Going Concern Assumption** – This assumption presumes that the enterprise will continue its operations in the foreseeable future and will not be forced to liquidate or materially curtail the scale of its operations. The entity is assumed to continue as a going concern unless there is objective evidence of intentions or inability to continue operations. This assumption affects the valuation and classification of assets and liabilities in the balance sheet, as assets are valued on the basis of their continued use in operations rather than on their forced sale value.

**2. Accrual Basis Assumption** – This assumption underlies accrual accounting, wherein transactions and events are recognised when they occur, not when cash is actually received or paid. Revenue is recognised when earned (criterion of performance), and expenses are matched with the revenue to which they relate, irrespective of timing of cash flows. This ensures that the financial performance is measured accurately for the period in which it is earned.

**3. Consistency Assumption** – This assumption requires that the accounting policies, procedures, and methods, once adopted, shall be consistently applied from one accounting period to another unless there is a specific change. This consistency in application of accounting policies ensures comparability of financial statements over different periods, enabling users to make meaningful year-on-year c…

Question 11

On 31st March 2013 a business firm finds cost of a partly finished unit is ₹530. The unit can be finished in 2013-14 by additional expenditure of ₹310. Finished unit can be sold for ₹750 subject to 4% brokerage on selling price. The firm seeks your advice regarding: (i) the amount at which the unfinished unit should be valued as at 31st March 2013 for preparation of final accounts and (ii) the desirability or otherwise of producing the finished unit.

Accepted Answer

**Part (i): Valuation of Unfinished Unit as at 31st March 2013**

As per **AS 2 (Accounting Standard 2) – Valuation of Inventories**, inventories must be valued at the **lower of cost and net realizable value (NRV)**.

Cost of partly finished unit = **₹530**

Net Realizable Value is calculated as:
NRV = Estimated selling price − Estimated selling costs − Estimated costs to complete
NRV = ₹750 − (4% of ₹750) − ₹310
NRV = ₹750 − ₹30 − ₹310
NRV = **₹410**

Since NRV (₹410) is **lower than cost (₹530)**, the unfinished unit should be valued at **₹410** in the balance sheet as at 31st March 2013. This reflects the prudence concept by recognizing the potential loss that would be incurred on completion and sale.

**Part (ii): Desirability of Producing the Finished Unit**

To determine whether to complete and sell the unit, we apply **relevant costing principles**. Only incremental/avoidable costs and revenues should be considered; the sunk cost of ₹530 is not relevant.

**Incremental Analysis:**
Net selling price (after 4% brokerage):
₹750 − ₹30 = **₹720**

Less: Incremental costs to complete = **₹310**

**Net incremental benefit** = ₹720 − ₹310 = **₹410**

Since the incremental benefit is **positive (₹410)**, it **is desirable to produce and sell the finished unit**. The firm should incur the additional ₹310 expenditure, as it will recover ₹720 from the sale, yielding a contribution of ₹410 towards fixed costs and profit. The overall profit may be negative if viewed from total cost…

Question 12

M/s. Moon Ltd. sold goods worth ₹6,50,000 to Mr. Star. Mr. Star asked for trade discount of ₹53,000 which was agreed to. On receipt, Mr. Star found goods worth ₹67,000 were defective and returned them. Mr. Star paid ₹5,30,000. The accountant of M/s. Moon Ltd. booked the sale for ₹5,30,000. Discuss the contention of the accountant with reference to Accounting Standard (AS) 9.

Accepted Answer

**Answer:** The accountant's contention of booking the sale at ₹5,30,000 is **not entirely correct** when viewed against the requirements of Accounting Standard (AS) 9 - Revenue Recognition.

**Correct Treatment under AS 9:**

AS 9 requires that revenue from sale of goods should be recognized at the agreed price **after deducting trade discounts**, but **returns should be separately identified and deducted** from the original sale value. The treatment should be:

**Sale Price (List Price)**: ₹6,50,000
**Less: Trade Discount (agreed)**: ₹53,000
**Revenue from Sale (after trade discount)**: ₹5,97,000
**Less: Return of Defective Goods**: ₹67,000
**Net Revenue from Sales**: ₹5,30,000

**Analysis of Accountant's Contention:**

While the final net revenue figure of ₹5,30,000 is mathematically correct, the accountant's approach of directly booking ₹5,30,000 without distinguishing between trade discounts and returns is **not in accordance with AS 9**. The standard requires separate identification of:

1. **Trade Discounts** - These are reductions in the list price agreed at the time of sale and should be deducted while recognizing revenue (giving ₹5,97,000)

2. **Returns** - These are post-delivery reductions due to defects/damage and should be shown separately as credit notes or separately deducted (₹67,000)

**Why This Distinction Matters:**

The accountant's direct booking fails to provide proper disclosure because:

- **Statement of Profit and Loss presentation**: Sales should be…

Question 13

What are the issues, with which Accounting Standards deal?

Accepted Answer

**Accounting Standards (AS)** issued by the Institute of Chartered Accountants of India deal with a broad range of issues related to financial accounting and reporting. These can be categorized as follows:

**1. Recognition and Measurement of Elements**: Standards provide guidance on when to recognize and how to measure assets, liabilities, equity, revenue, and expenses in financial statements. They establish principles for determining whether an item meets the definition of a financial statement element.

**2. Valuation Methods and Principles**: Standards address various valuation approaches for different items—such as inventory valuation methods (FIFO, LIFO, weighted average), depreciation methods, and measurement bases for investments and property, plant and equipment (AS 2, AS 10).

**3. Revenue Recognition and Measurement**: Standards provide criteria and methods for recognizing revenue from sales of goods, rendering of services, and construction contracts, including timing and amount of recognition (AS 9).

**4. Accounting Treatment of Specific Transactions**: Standards deal with complex or specialized transactions, including borrowing costs (AS 16), foreign exchange effects (AS 11), leases (AS 19), government grants (AS 12), and discontinuing operations.

**5. Presentation and Disclosure Requirements**: Standards prescribe how financial information should be presented and what disclosures are mandatory—such as related party disclosures (AS 18), segment information (AS …

	₹
Opening Stock (31 March 2012)	9,40,000
Add: Purchases (01-04-2012 to 15-12-2012)	13,20,000
Total Stock Available	22,60,000
Less: Cost of Goods Sold (80% of ₹20,25,000)	16,20,000
Estimated Stock at Date of Fire	6,40,000
Less: Stock Salvaged	1,40,000
Stock Destroyed (Loss)	5,00,000

Dr	NV (₹)	Int (₹)	Cost (₹)	Cr	NV (₹)	Int (₹)	Cost (₹)
To Bank A/c (Purchase 1.12.12)	10,00,000	20,000	10,00,100	By Bank A/c (Sale 1.3.13)	10,00,000	50,000	9,99,400
To P&L A/c (Interest Income)	—	30,000	—	By P&L A/c (Loss on Sale)	—	—	700
Total	10,00,000	50,000	10,00,100	Total	10,00,000	50,000	10,00,100

CA Inter Adv Accounting

Drill 5 questions from this paper — instant grading

Worked Solution

Write it like this

1The skeleton

2Examiner-rewarded phrases

3Common trap

Dr	₹	Cr	₹
To Opening Goods with Customers (at cost) ₹80,000 × 4/5	64,000	By Cash Received	3,00,000
To Goods Sent on HP (at cost) ₹4,00,000 × 4/5	3,20,000	By Outstanding Instalments	10,000
To Profit transferred to P&L A/c	62,000	By Closing Goods with Customers (at cost) ₹1,70,000 × 4/5	1,36,000
Total	4,46,000	Total	4,46,000