Q(d)Inventory Valuation, Accounting Standard 2
5 marks medium
Z Limited ordered 13,000 kg. of chemicals at ₹ 90 per kg. The purchase price includes excise duty of ₹ 5 per kg, in respect of which full CENVAT credit is admissible. Further, State VAT is leviable at ₹ 2.5 per kg on purchase price. Freight incurred amounted to ₹ 30,000. Normal transit loss is 4%. The company actually received 12,400 kg and consumed 10,000 kg. The company has received trade discount in the form of cash amounting to ₹ 1 per kg. The chemicals were delivered in containers. The containers were not reusable, hence sold for ₹ 500. The administrative expenses incurred to bring the chemicals were ₹ 10,000.
Compute the value of inventory and allocate the material cost as per AS-2.
QbCash flow statement classification, AS 3
0 marks easy
Which activity does the purchase of business falls under and whether netting off of aggregate cash flows from disposal and acquisition of business units is possible?
QcDebtors Ledger Adjustment Account, receivables management
4 marks medium
From the following information available from the books of a trader from 01/01/2015 to 31/03/2015, you are required to draw up the Debtors Ledger Adjustment Account in the General Ledger:
i. Total sales amounted to ₹ 2,00,000 including the sale of machine for ₹ 6,800 (book value ₹ 12,000). The total cash sales were 85% less than the total credit sales.
ii. Cash collections from debtors amounted to 70% of the aggregate of the opening debtors and credit sales for the period. Debtors were allowed a cash discount of ₹ 20,000.
iii. Bills receivable drawn during the three months totalled ₹ 45,000 of which bills amounting to ₹ 20,000 were endorsed in favour of suppliers. Out of the endorsed bills, one bill for ₹ 6,000 was dishonoured for non-payment as the party became insolvent, his estate realized nothing.
iv. Cheque received from debtors ₹ 15,000 were dishonoured, a sum of ₹ 3,500 was irrecoverable, Bad debts written off in the earlier year's realized ₹ 15,000.
v. Sundry debtors as on 01/01/2015 stood at ₹ 1,50,000.
Q1(a)Construction Contracts - AS-7
5 marks medium
Uday Constructions undertake to construct a bridge for the Government of Uttar Pradesh. The construction commenced during the financial year ending 31.03.2016 and is likely to be completed by the next financial year. The contract is for a fixed price of ₹ 12 crores with an escalation clause. The costs to complete the whole contract are estimated at ₹ 9.50 crores of rupees. For the year ended 31.03.2016:
Cost incurred upto 31.03.2016 ₹ 4 crores
Cost estimated to complete the contract ₹ 6 crores
Escalation in cost by 5% and accordingly the contract price is increased by 5%.
You are required to ascertain the state of completion and state the revenue and profit to be recognized for the year as per AS-7.
Q1(b)Valuation of Inventories - AS-13
5 marks medium
M/s Active Builders Ltd.. invested in the shares of another company on 31st October, 2015 at a cost of ₹ 4,50,000. It also earlier purchased Gold of ₹ 5,00,000 and Silver of ₹ 2,25,000 on 31st March, 2013.
Market values as on 31st March, 2016 of the above investments are as follows:
Shares ₹ 3,75,000; Gold ₹ 7,50,000 and Silver ₹ 4,35,000
How will the above investments be shown in the books of account of M/s Active Builders Ltd. for the year ending 31st March, 2016 as per the provision of AS-13?
Q1(c)Fixed Assets - Revaluation and Depreciation
5 marks medium
Argon Ltd. purchased a shop on 1st January, 2001 at a cost of ₹ 8,50,000. The useful life of the shop is estimated as 30 years with residual value of ₹ 25,000 and depreciation is provided on a straight line basis. The shop was revalued on 30th June, 2015 for ₹ 19,50,000 and the revaluation was incorporated in the accounts.
Calculate:
(i) The surplus on revaluation;
(ii) Depreciation to be charged in the Profit and Loss account for the year ended on 31st December, 2015.
Q3Partnership Accounts and Final Accounts
8 marks hard
The following is the Balance Sheet of Manish and Suresh as on 1st April, 2015: Capital: Manish ₹ 1,50,000; Suresh ₹ 75,000; Creditors for goods ₹ 30,000; Creditors for expenses ₹ 25,000. Assets: Building ₹ 1,00,000; Machinery ₹ 65,000; Stock ₹ 40,000; Debtors ₹ 50,000; Bank ₹ 25,000. Additional information: (i) Creditors' Velocity 1.5 month & Debtors' Velocity 2 months. (ii) Stock level is maintained uniformly in value throughout all over the year. (iii) Depreciation on machinery is charged @ 10%, Depreciation on building @ 5% in the current year. (iv) Cost price will go up 15% as compared to last year and also sales in the current year will increase by 25% in volume. (v) Rate of gross profit remains the same. (vi) Business Expenditures are ₹ 50,000 for the year. All expenditures are paid off in cash. (vii) Closing stock is to be valued on LIFO Basis. Prepare Trading, Profit and Loss Account, Trade Debtors A/c and Trade Creditors A/c for the year ending 31.03.2016.
Q3(b)Not-for-Profit Organisations - Balance Sheet
8 marks hard
Case: Following information has been given for Bharat Sports Club, Delhi for the year ending 31.12.2014 and 31.12.2015. Building (subject to 10% depreciation for the current year): 60,000 (31.12.2014), ? (31.12.2015). Furniture (subject to 10% depreciation for the current year): - (31.12.2014), 20,000 (31.12.2015). Stock of Sports Materials: 5,000 (31.12.2014), 2,000 (31.12.2015). Prepaid Insurance: 3,000 (31.12.2014), 6,000 (31.12.2015). Outstanding Subscription: 12,000 (31.12.2014), 8,000 (31.12.2015). Advance Subscription: 6,000 (31.12.2014), 4,000 (31.12.2015). Outstanding Locker Rent: - (31.12.…
Prepare Opening and Closing Balance Sheet of Bharat Sports Club as on 31st Dec., 2014 and 31st Dec., 2015 respectively.
Q4(a)Hire Purchase Accounts
8 marks very hard
Girish Transport Ltd. purchased from NCR Motors 3 electric rickshaws costing ₹ 60,000 each on the hire purchase system on 1.1.2013. Payment was to be made ₹ 30,000 down and the remainder in 3 equal installments payable on 31.12.2013, 31.12.2014 and 31.12.2015 together with interest @ 10% p.a. Girish Transport Ltd. writes off depreciation @ 20% p.a. on the reducing balance. It paid the installment due at the end of 1st year i.e. 31.12.2013 but could not pay next on 31.12.2014. NCR Motors agreed to leave one e-rickshaw with the purchaser on 31.12.2014 adjusting the value of the other two e-rickshaws against the amount due on 31.12.2014. The e-rickshaws were valued on the basis of 30% depreciation annually on WDV basis. Show the necessary Ledger accounts in the books of Girish Transport Ltd. for the year 2013, 2014 and 2015.
Q4(b)Investment accounting, debentures, conversion
8 marks hard
Case: A Ltd. purchased on 1st April, 2015 8% convertible debenture in C Ltd. of face value of ₹ 2,00,000 @ ₹ 108. On 1st July, 2015 A Ltd. purchased another ₹ 1,00,000 debenture @ ₹ 112 cum interest. On 1st October, 2015 ₹ 80,000 debenture was sold @ ₹ 105. On 1st December, 2015, C Ltd. give option for conversion of 8% convertible debentures into equity share of ₹ 10 each. A Ltd. receive 5000 equity share in C Ltd. in conversion of 25% debenture held on that date. The market price of debenture and equity share in C Ltd. at the end of year 2015 is ₹ 110 and ₹ 15 respectively. Interest on debenture is…
Prepare investment account in the books of A Ltd. on average cost basis.
Q5Amalgamation and Reconstruction of Companies
5 marks medium
AB Ltd. is to purchase the whole of the assets of B Ltd. (except cash and Bank balances) for ₹ 4,91,000 to be settled as to ₹ 16,000 in cash and as to the balance by issue of 38,000 equity shares, credited as fully paid, to be treated as valued at ₹ 12.50 each. A Ltd. and B Ltd. both are to be wound up, the two liquidators distributing the shares in AB Ltd. in kind among the equity shareholders of the respective companies. The liquidator of A Ltd. is to pay the preference shareholders ₹ 12 in cash for every share held in full satisfaction of their claims. AB Ltd. is to make a public issue of 60,000, 5% cumulative preference shares at a premium of 10% and 30,000 equity shares at the issue price of ₹ 12.50 per share, all amount payable in full on application. It is estimated that the cost of liquidation (including the liquidators' remuneration) will be ₹ 10,000 in case of A Ltd. and ₹ 5,000 in case of B Ltd. and that the preliminary expenses of AB Ltd. will amount to ₹ 24,000 exclusive of the underwriting commission of ₹ 38,900 payable on the public issue. You are required to prepare the initial Balance Sheet of AB Ltd. on the basis that all assets other than goodwill are taken over at the book value.
Q5(a)Loss of profit policy, insurance calculation
8 marks hard
Case: A firm has decided to take out a loss of profit policy for the year 2016 and given the following information for the last accounting year 2015. Variable manufacturing expenses ₹ 14,20,000, Standing charges ₹ 1,50,000, Net profits ₹ 80,000, Non-operating income ₹ 2,500, Sales ₹ 18,00,000.
Compute the sum to be insured in each of the following alternative cases showing the anticipation for the year 2016:
Q5(b)Partnership accounting, current account
8 marks very hard
Case: Rahim has a current account with partnership firm. It has debit balance of ₹ 2,40,000 as on 1.04.2015. He has further deposited the following amounts on dates: 14/04/2015 - ₹ 1,20,000; 30/04/2015 - ₹ 3,00,000; 18/05/2015 - ₹ 1,23,000.
Rahim has a current account with partnership firm. It has debit balance of ₹ 2,40,000 as on 1.04.2015. He has further deposited the following amounts: 14/04/2015 - ₹ 1,20,000; 30/04/2015 - ₹ 3,00,000; 18/05/2015 - ₹ 1,23,000.
Q7(a)Amalgamation of Companies, Accounting Standard 14
4 marks medium
Anjana Ltd. is absorbed by Sanjana Ltd., the consideration being the takeover of liabilities, the payment of cost of absorption not exceeding ₹ 10,000 (actual cost ₹ 9,000) the payment of the 9% debentures of ₹ 50,000 at a premium of 20% in 8% debentures issued at a premium of 25% at face value and the payment of ₹ 15 per share in cash and allotment of three 11% preference share of ₹ 10 each at a discount of 10% and four equity share of ₹ 10 each at a premium of 20% fully paid for every five shares in Anjana Ltd.. The number of share of the vendor company are 1,50,000 of ₹ 10 each fully paid. Calculate purchase consideration as per Accounting Standard – 14.
Q7(b)Accounting Tools
4 marks medium
What are the disadvantages of a spreadsheet as an accounting tool ?
Q7(c)Due Date of Bills
4 marks medium
X owes Y the following sums of money due on the dates started:
₹ 400 due on 5th January, 2016
₹ 200 due on 20th January, 2016
₹ 800 due on 4th February, 2016
₹ 100 due on 26th February, 2016
₹ 50 due on 10th March, 2016
Calculate such a date when payment may be made by X in one installment resulting in no loss of interest to either party. Assume base date as 5th January, 2016.
Q7(d)Accounting Standard 3, Cash Flow Statement
4 marks medium
Classify the following activities as per AS-3 Cash Flow Statement:
(i) Interest paid by financial enterprise
(ii) Dividend paid
(iii) Tax deducted at source on interest received from subsidiary company
(iv) Deposit with Bank for a term of two years