Q3(b)Buy-back of shares and bonus issue — journal entries
5 marks medium
The following is the summarised Balance Sheet of M/s Vriddhi Ltd. as on 31st March, 2016:
Equity & Shareholders' Fund:
- Share Capital: 1,00,000 Equity Shares of ₹10 each fully paid: ₹10,00,000
- Securities Premium: ₹3,00,000
- Profit & Loss: ₹5,50,000
- Other Reserves: ₹2,50,000
Non-Current Liabilities:
- Long Term Borrowings (Secured by floating charge): ₹20,00,000
Non-Current Assets:
- Land & Building: ₹21,50,000
- Plant & Machinery: ₹15,00,000
- Investments: ₹2,00,000
Current Assets:
- Cash and Cash Equivalents: ₹1,50,000
- Others: ₹40,000
The company proposes to buy back 25,000 of its equity shares @ ₹15 per share. For this purpose it sold all its investments for ₹2.50 lakhs. On 25th April, 2016, the company achieved the target of buy back. On 1st May, 2016, the company issued one fully paid up share of ₹10 each by way of bonus for every five equity shares held by the equity shareholders.
You are requested to pass necessary Journal Entries for all the above transactions. All necessary workings should form part of your answer.
Q4Company liquidation — Receiver's account and Liquidator's ac
16 marks very hard
The summarised Balance Sheet of M/s X Limited as at 31st March, 2016 is as follows:
Equity & Liabilities:
- Share Capital:
- 50,000 equity shares of ₹10 each fully paid: ₹5,00,000
- 75,000; 10% Preference Shares of ₹10 fully paid up: ₹7,50,000
- 25,000 Equity Shares of ₹10 each, ₹8 per share paid up: ₹2,00,000
- Non-Current Liabilities:
- Debentures: ₹10,75,000
- Long-term Borrowings: ₹7,50,000
- Others: ₹3,50,000
- Current Liabilities: ₹1,50,000; ₹1,90,000
- Tax Assessment (completed February 2016): ₹1,25,000
Non-Current Assets:
- Land & Building: ₹6,50,000
- Current Assets: ₹21,80,000
Mortgage loan was secured against Land and Building. Debentures were secured by a floating charge on all assets. The company was unable to meet the payments and therefore the Debenture Holders appointed a Receiver. He brought the Land & Building to auction and realised ₹8,00,000. He also took charge of Sundry Assets of value ₹11,80,000 and realised ₹10,00,000. Bank overdraft was secured by personal guarantee of the Directors and on the Bank raising a demand, the Directors paid off the due from their personal resources. Cost incurred by the Receiver were ₹9,750 and by the Liquidator ₹15,000. The Receiver was not entitled to any remuneration but the Liquidator was to receive 2% fee on the value of assets realised by him. Preference Shareholders have not been paid Dividend for the period after 31st March, 2014 and interest for the last half year was due to Debenture Holders. Rest of the Assets were realised at ₹7,50,000.
Prepare the Accounts to be submitted by the Receiver and Liquidator.
Q5(a)Banking company accounts — Bills for Collection, Acceptances
10 marks hard
From the following facts drawn from the records of Honest Bank for the year ended 31st March, 2015, prepare the accounts as mentioned:
Q5(b)Insurance company accounts — Unexpired Risk Reserve journal
6 marks medium
From the following information given by M/s Long Live Insurance Co. Ltd., you are required to pass necessary Journal Entries (with narration and required working notes) relating to Unexpired Risk Reserve. Also show 'Unexpired Risk Reserve Account for 2015-16' in columnar form:
(i) On 31.03.2015, it had reserve for unexpired risk amounting to ₹80 crores. Its composition was as under:
(a) ₹30 crores in respect of Marine insurance business
(b) ₹40 crores in respect of Fire insurance business
(c) ₹10 crores in respect of Miscellaneous insurance business
(ii) M/s Long Live Insurance Co. Ltd. reserves 100% of net premium income in respect of Marine insurance business and 50% of net premium income in respect of Fire and Miscellaneous insurance.
(iii) During 2015-16, the following business was conducted (Premium in ₹ lakhs):
Fire Marine Misc
Premium collected (from insured): 36 86 24
Ceded in respect of risk undertaken: 14 10 8
Premium paid/payable to other
insurance companies: 10 10 15
Q6(a)Departmental accounts — Memorandum Stock and Mark-up account
8 marks hard
W' Shyam Udyos, a retail store, has two departments, Department X and Department Y for each of which stock account and memorandum 'mark-up' account is kept. All the goods supplied to each department are debited to stock account at cost plus a 'mark-up', which together make up the selling price of the goods and in the account the sale proceeds of the goods are credited. The amount of 'mark-up' is credited to the Departmental Mark-up Account. If the selling price of any goods is reduced below its normal selling price, the reduction 'mark-down' is adjusted both in the Stock Account and the Departmental Mark-up Account. The rate of 'mark up' for X Department is 33-1/3% of the cost and for Y Department is 50% of the cost.
The following figures have been taken from the books for the year ended March 2016:
Dept X (₹) Dept Y (₹)
Stock on April 1 at cost: 3,15,000 5,58,000
Sales: 22,17,000 28,02,000
Purchases: 28,68,000 37,50,000
Notes:
(1) The stock of Department X on April 1, 2015 included goods the selling price of which had been marked down by ₹37,800. These goods were sold during the year at the reduced prices.
(2) Certain stock of the value of ₹2,07,000 purchased from Department X was later in the year transferred to Department Y and sold for ₹3,10,500. As a result, though the cost of the goods is included in Department X, the sale proceeds have been credited to Department Y.
(3) During the year 2015-16, to promote the goods, they were marked down:
Dept X: Cost ₹1,68,000, Mark-down ₹10,800
Dept Y: Cost ₹3,00,000, Mark-down ₹60,000
All the goods marked down were sold except Department Y goods of the value of ₹1,50,000 marked down by ₹30,000.
(4) At the time of stock taking on 31st March, 2016, it was discovered that stock of Department X of the cost of ₹11,700 was missing and it was decided that the amount be written off.
You are required to prepare for both the departments for the year ended 31st March, 2016:
(a) The Memorandum Stock Account, and
(b) The Memorandum Mark-up Account.
Q6(b)Branch accounting — Branch Account and Head Office Trading &
8 marks hard
Mr. Chem Swami of Chennai trades in Refined Oil and Ghee. He has a branch at Salem. He despatched 30 tins of Refined Oil @ ₹1,500 per tin and 20 tins of Ghee @ ₹5,000 per tin on 1st of every month. The Branch has incurred expenditure of ₹45,890 which is met out of its collections; this is in addition to expenditure directly paid by Head Office.
Following are the other details:
Chennai H.O. (₹) Salem B.O. (₹)
Goods despatched — Refined Oil: 27,50,000 —
Goods despatched — Ghee: 46,28,000 —
Direct Expenses: 6,35,800 76,800
Sales — Refined Oil: 24,10,000 5,95,000
Sales — Ghee: 38,40,500 14,50,000
Collection during the year: 20,15,000 —
Remittance to Head Office: — 19,50,000
Balance sheet items as on 01.04.2015 and 31.03.2016:
Chennai H.O.:
- Furniture & Fixtures: ₹44,000 / ₹8,90,000
- Other assets: ₹10,65,000 / ₹15,70,000
- Building: ₹5,10,800 / ₹7,14,780
- Debtors: ₹98,600
Salem Branch:
- Furniture & Fixtures: ₹22,500 / ₹19,500
- Stock: ₹40,000 / ₹90,000
- Debtors: ₹1,80,000 / (closing as per balance sheet)
- Cash in Hand: ₹25,600 / (closing as per balance sheet)
- Creditors: ₹21,800 / ₹21,420
Additional Information:
(i) Addition to Building on 01.04.2015: ₹2,41,600 by H.O.
(ii) Rate of depreciation: Furniture & Fixture @ 10% and Building @ 5% (already adjusted in the above figures)
(iii) The Branch Manager is entitled to 10% commission on overall net profits, charging such commission
(iv) The General Manager is entitled to a salary of ₹20,000 per month
(v) General expenses incurred by Head Office: ₹1,86,000
You are requested to prepare Branch Account in the Head Office books and also Chem Swami Trading and Profit & Loss Account (excluding branch transactions) for the year ended 31st March, 2016.
Q7(a)AS 11 — Foreign currency operations — definitions
4 marks medium
With reference to AS 11, define the following:
(i) Integral Foreign Operation
(ii) Non-Integral Foreign Operation
Q7(b)AS 29 — Contingent liability — copyright infringement disput
4 marks medium
M/s XYZ Ltd. is in a dispute with a competitor company. The dispute is regarding alleged infringement of Copyrights. The competitor has filed a suit in the court of law seeking damages of ₹250 lakhs. The Directors are of the view that the claim can be successfully resisted. How would the matter be dealt in the annual accounts of the Company in the light of AS-29? Explain in brief giving reasons for your answer.
Q7(c)Financial statement elements — measurement bases (historical
4 marks medium
Explain in brief, the alternative measurement bases for determining the value at which an element can be recognised in the Balance Sheet or Statement of Profit and Loss.
Q7(d)LLP Act — Designated Partner — roles and liabilities
4 marks medium
Write short notes on Designated Partner in a Limited Liability Partnership and what are their liabilities.
Q7(e)Marine insurance accounts — Net Premium earned and Net Claim
4 marks medium
From the following particulars of M/s Tsunami Marine Insurance Limited for the year ending 31st March, 2016, find out:
(i) Net Premium earned
(ii) Net Claims incurred
Direct Business (₹ in lakhs):
PREMIUM:
Col 1 Col 2
Premium: 4,440 376
Receivable — 01.04.2015: 200 18
Receivable — 01.04.2016: 189 16
Paid (Reinsurance): 305
Payable — 01.04.2015: 14
Payable — 01.04.2016: 9
CLAIMS:
Paid: 3,450 227
Payable — 01.04.2015: 45 8
Payable — 01.04.2016: 48 6
Recoverable — 01.04.2015: 101 20
Recoverable — 01.04.2016: 19