(Paper) Sample PaperAccounts - 1998 (I.C.S.E)

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Sample Paper Accounts - 1998 (I.C.S.E)


Time allowed: 2 hours

Answers to this paper must be written on the paper provided separately.
-You will NOT be allowed to write during the first 15 minutes.
-This time is to be spent in reading the question paper.
-The time given at given at the head of this paper is the time allowed for writing the answers.
-All working, including rough work, must be clearly shown ; it should be done immediately before/after the rest of the answers.

PLEASE ALSO NOTE that parts of the same questions MUST BE DONE continuously so as to facilitate evaluation
- Attempt all questions from Section A and two questions form Section B.
- The intended marks for questions or parts of questions are given in brackets [  ].

SECTION - A

Q 1(a) The following questions has to be answered using two columns.Rewrite Column I in the order given.Column II contains descriptive phrases for items given in column I.Match the phrases to suit the items given in column I by selecting phrases from Column II. Ignore those that remain.
                            

Column I Column II
(i) Depreciation Cost of Goods sold
(ii) Fixed capital Method Ideal situation reflect 3:2
(iii)'Materials consumed' two and not seven persons is the minimum number
(iv) Partnership firms indicates the owner's interest
(v) Working capital ratio needs Current A/c for completing details
(vi)Proprietory Fund could be because of efflux of time.
also referred to as Fixed instalment Method.
Norm 1:2 Ratio.

Q 1(b) From each set given below ,pick out the odd one. Answer  in the given serial order :-

(i) Cost price of sales ; goods sold at cost price : Sales less returns inward ; materials   consumed
(ii) With reference to practical work in partnership firms : Interest on capital ; interest on loan borrowed from a partner ; Commission allowed to a partner ; Interest on current account charged to a partner.

(iii) Assets bought on credit ; Expenses incidential to the asset bought payable ; part of the assets bought on credit rejected  because defective ; payment due with reference to the assets ,made and recorded.
(iv)Direct expenses ; financial expenses ; Selling expenses ;Administrative expenses .

(v). Fixed instalment  method ; original cost price method ; Written down value method ; Straigth line method .

(vi) Pre paid  insurance ; Deffered Advertising ;pre received rent; unused Fuel.

(vii)Capital fund ;Special fund ;general fund ; Common fund

(viii) Freigth ; Octroi ;Sales tax ;imported Duty.

Q1(c) Write explanatory notes on :-
(i) Depreciation is accounted annually
(ii) Quick Ratio
(iii)fixed Capital method


Q 2 trial Balance of mr. j Junior as on 31.3.1997:-
                                                                           Debit                               Credit
factory power                                                         16000
Carrier charges                                                         2500       
Salaries                                                                  20400
Sales & purchase of goods                                      140000                          267000
Machinery( mannufactured through
factory workers)                                                     120000
Discounts   received and allowed                                  5000                             6000
Wages(manufacturing activity )                                  18000                 
Stock                                                                       25000
Commission                                                             3800
Insurance(1/4 is a personal expenses)                         8000
Goods taken home in Dec,1996                                                                        5000
Loose Tools (Fixed Assets)                                         11000
Returns of goods                                                         5000                               6000
Debtors & Creditors                                                   45000                             18000
Carriage on sales                                                        6000
Rent & Rates(paid during this year)                             10800
Bad Debts written off & recovered                                2000                                1600
Investments as from 1-1-1997                                    80000
Bank accounts                                                           22000                              10000
Drawings & Capital                                                     15000                            237000
Bills Payable & Receivable                                            6000                                4000
Income from Investments applicable @ 10%p.a                                                    1800
Cash                                                                      2500    
                                                                             560200                          560200

  Compile Final Accounts, incorporating the following adjustments for the owner.
Adjustments:
(i) The expenditure per accounting year is as follows for -
               Rates          Rs 10000
               Rent           Rs   3000
(ii) Wages include Rs 5500 which was actually salaries and salaries are payable at the rate of Rs7000 per quarter for the 12 months of this accounting year.
(iii) An inventory of the godown on 31-3-1997 reflected stock value stated as Rs 50000. This included a personal consignment for Rs10000 (awaiting cartage to country home), wrongly listed in the unsold inventory.
 

SECTION - B

-Answer any two questions from the four question given below :
-Where required, stretch your answer for a question across the double sides of the writing paper to ensure neatness and consequent accuracy and speed in calculations.

Q 3 Give complete journal entries of the following sets, clearly indicating the sections and sub-sections to facilitate accurate corrections:
(a) (i) Furniture of book- value Rs10000 to be depreciated by Rs750 and sold for Rs8250 cash.
(ii) Office premises on lease for ten years, total cost Rs 1000000. Account for its annual depreciation in the fifth year of its use.


Q 3 (b) (i)Account for the year's net profit of Rs 250000 earned by a firm,M/s Shroff and Bros., so that the work of appropriation of profit as per the Articles of partnership can be completed.
(ii)Account for Rs 25000 set aside anually as General Reserve by the above firm.Ans:Date


Q 3 (c)(i) Account for the closing inventory reported as Rs88000, an overvaluation by 10%.
(ii)20% of debtors Rs 60000, long overdue , are to be written off as Bad Debts.
(iii)Close the following accounts for an accounting year :

Sales returns 20000
Purchases 350000
Freight 7000
Sales 500000
Purchases Returns 15000
factory expenses 35000
Stocks(b/f from previous year) 30000

Q 3(d) (i) give the adjustment entry for Honorarium expenses of Rs 80000 for a year of which Rs77000 only has been paid by the end of the year .
(ii) Account for the years surplus of Rs 55000

Q 4 (a) M/s Ram and Rahim in the construction line bought three cement mixers costing Rs120000 each on July 1, 1995. They expected  to fetch a scrap value of Rs 20000 per mixer after using each of them for four years.
Accordingly, the Fixed Installments Method was used for two accounting years. At the end of the second accounting year, one mixer was sold off, fetching an immediate cheque payment of Rs 50000
From April 1, 1997, it was decided to apply the written Down Value Method @30% p.a for depreciation. Prepare the current mixtures A/c for three years ending on 31-3-1998, incorporating the above data. 


Q 4(b) Answer the following questions , based on the data given :
i)Value of Capital Employed
ii)Value of Quick Assets
iii)Value of Non-Quick Liabilitiesa
iv)State the equation for and then work out the Debt Equity Ratio.
Balance Sheet of Mr. Go Getter as on 31-3-1997

      Rs      Rs
Capital 90000 Goodwill 25000
Reserve 10000 Fixed Assets 60000
Long- term loans 20000 Investment 20000
Creditors 7000 Debtors 8000
Bank O.D 3000 Cash & Bank 5000
Accruals 5800 Accruals 1400
Income of the coming year 600 Pre-paid & Deferred expenses 2000
                    
136400     		 Stock 15000
136400

Q 5 River, Well, Spring and Lake are in partnership. Their firm name is Plentiful Waters & co.They have mutually agreed to :
(i) Allow Interest on Capital @ 15% p.a.
(ii) Charge Interest on Drawing @ 10% p.a.
(iii) Accept Well's claim for a salary of Rs.6000 per month for six months only for round the clock work put in by him in the drought stricken areas
(iv)Charge an annual allowance of Rs.1500 per two months per partner to the buisness to help cover expenses and compete successfully with cut-throat competition
(v) River and Well have each contributed equally towards total Loan Capital of Rs.10,00,000  borrowed by the firm from them.
(vi) Rs.20000 p.a. is set aside as Reserve if the Net profit available for appropriation is greater than Rs.5,10,000.
(vii) For sharing the residue of profits, River's profit share is 50% . Partners Well, Spring , and Lake get their share from the remaining profit in the ratio of 2 : 2: 1
The required data for the year 1-4-95 to 31-1-96 is-
(a) Capital- River Rs. 6,00,000 , Well Rs.400000 Spring and Lake 500000 Rs. each
(b) Each withdrew 10% of their opening capital balances as on 1-4-95 as drawings for the years .
(c) The years net profit b/d from the Profit / Loss A/c is reported as Rs.5,06,000.   Its scrutiny reveals that the partners annual allowance was debited in the P/L A/c and that Rs.20000 payable to the buisness manager as his special commission had not been accounted for at all.

Compile the Profit and Loss Appropriation A/c only.using the facts and financial data given. 

Q 6 Compile final accounts for the club for the year ending 31-3-1996.
Active action Club Balance Sheet as on 31-3-1995.

Club Fund (includes all legacies received 35,000 Land 3,00,000
Income & Expenditure A/c credit Balance 25,000 Furniture & Sports Equipment 64,000
Sports Complex Fund 10,00,000 Sports Complex in use Refreshment Room - Stock of supplies 5,800
    Cash & bank 5,200
  13,75,000   13,75,000
Receipts & Payment A/c for the year ended 31-3-1996
Particulars Rs Particulars Rs
To Cash & Bank balances 5,200 By Refreshment Room-supplies 75,000
To Life Membership Fees (capitalised 40%) 60,000 By Honorarium to Coaches 35,000
To Grant 60,000 By Annual Celebrations 45,000
To Annual Celebrations - Receipts 60,000 By Investment short term 2,75,000
To Legacy (by the will of Late Mr. Go Ahead, founder President) 7,00,000 By Extension to Sports Complex (under construction as yet) 4,50,000
To Refreshment Room Receipts 1,20,000 By Club expenses 37,400
    By expenses on activities 60,000
    By Cash & Bank balances 27,800
  10,05,200   10,05,200

 

ANSWERS

 

Accounts - 1998 (I.C.S.E)

SECTION - A 

Ans 1(a)

Column I Column II
(i) Depreciation could be because of efflux of time
(ii) Fixed capital Method needs current a/c for completing details
(iii)'Materials consumed' cost of goods sold
(iv) Partnership firms two and not seven persons is the minimum number.
(v) Working capital ratio `Ideal situation reflect 3:2
(vi)Proprietory Fund Indicates the owners interest

Q 1(b) From each set given below ,pick out the odd one. Answer  in the given serial order :-
(i) Cost price of sales ; goods sold at cost price : Sales less returns inward ; materials   consumed
Ans materials  consumed

(ii) With reference to practical work in partnership firms : Interest on capital ; interest on loan borrowed from a partner ; Commission allowed to a partner ; Interest on current account charged to a partner.
Ans. interest on loan borrowed from a partner.

(iii) Assets bought on credit ; Expenses incidential to the asset bought payable ; part of the assets bought on credit rejected  because defective ; payment due with reference to the assets , made and recorded.
Ans. Assets bought on credit .

(iv)Direct expenses ; financial expenses ; Selling expenses ;Administrative expenses .
Ans.. Direct expenses.

(v). Fixed instalment  method ; original cost price method ; Written down value method ; Straigth line method .
Ans. Written down value method

(vi) Pre paid  insurance ; Deffered Advertising ;pre received rent; unused Fuel.
Ans. pre-received rent

(vii)Capital fund ;Special fund ;general fund ; Common fund
Ans.  Special fund

(viii) Freigth ; Octroi ;Sales tax ;imported Duty.
Ans: Sales tax

Ans 1(c) (i)Depreciation is a charge against profits to be accounted annually so as to have the indication of true and fair picture of profit or loss or net accounting result of any business.
(ii) Quick ratio is also called Acid test ratio which measures the capability of any firm to meet its short term obligation immediately
  Quick ratio = Quick Assets 
                      Current liability
where quick ratio= curent asset - stock - prepaid expenses
(iii) Sometimes partners decide to show their capital at original value except for the cases where additional capital is introduced by partner.
      In this method all adjustments related to interest on capital, interest on drawings, salaries, commissions etc. are made in a seperate account called current account maintained for each partner.

Ans 2                           Trading A/c for the year ending
on 31 March, 1997                                                                          
               Particulars              Amount Dr                            Particulars                 Amount Cr  

To opening stock 25000 By Sales        267000
Less: Returns  5000		 262000
To Purchasse  140000
Less: Returns      6000
Less: Drawings   5000		 129000 By closing Stock 40000
To Factory power 16000    
To Wages     18000
Less: Salaries  5500		 12500    
To carriage 2500    
To gross profit c/d 117000                 
  302000   302000    
Profit & Loss A/c for the year                                           ending on 31 March, 1997. 
Particulars                        Amount   Cr                       particulars                        Amount   Dr
To Rent & Rates   10800
add: outstanding   2200		 13000 By gross profit (b/d from trading a/c) 117000
To salaries  20400
add: wages  5500
add: o/s       2100		 28000 By Bad debts recovered 1600
To depreciation
machinery     12000
Loose tools     3000		 15000 By discount received 6000
To insurance     8000
less: personal   2000
        exp		 6000 By commission 3800
To bad debts 2000 By Interest
on investment
@ 10% p.a        1800
add:accrued       200		 2000
To discount
allowed		 5000    
To carriage on sales 6000    
To net profit (carried down to capital a/c) 55400 
130400		                 
130400   

              BALANCE SHEET AS ON 31 March,1997                                   Liabilities                Amount                  Assets                      Amount  
Capital    237000
add: N.P   55400
less: drawing (2000)
        (insurance)
less: drawing (15000)		 275400 Machinery 120000
less:dep.
@ 10%p.a  (12000)
 108000
Bank overdraft 10000 Loose tools  11000
less: dep.     (3000)		 8000
Creditors 18000 Closing stock 40000
Rent & rates o/s 2200 Investments 80000
salaries o/s 2100 debtors 45000
Bills payable 4000 Bank a/c 22000
    Cash 2500
    Bills Receivable 6000
                 Interest accrued 200
  311700       311700 
        

SECTION - B

 
Ans:   Date         Particulars                L.F           Amt Dr       Amt  Cr
a)       i) Depreciation A/c               Dr
       To furniture                     
(being depreciation charged on furniture)		   750

750
  Bank A/c Dr.
        To furniture A/c
(Being furniture sold for given amount)		   8250

8250
  Profit & loss A/c               Dr
    To depreciation
(being depreciation charged to P&L A/c)		   750
750
  Profit &:Loss A/c             Dr
     To furniture   
(being loss on sale of furniture are charged to P&L a/c)		   1000
1000
      ii) Depreciation A/c               Dr
       To office premises                   
(being depreciation charged on equal instalment basis)		   100000
100000
  Profit & loss A/c               Dr
    To depreciation
(being depreciation charged to P&L A/c)		   100000

100000


 

Ans. 3(b)Date     Particulars      L.F          Amount Dr         Amount Cr

      i) Profit & loss A/c Appropriation           Dr
    To partners capital A/c
(being years profit accounted for)		   225000

225000
       ii) Profit & loss A/c Appropriation           Dr
    To general reserve
(being general eservecreated from profits)		   25000
25000

Ans. 3(c)   Date     Particulars      L.F           Amt Dr            Amt  Cr
       i) Closing stock A/c                   Dr
    To Trading A/c
(being closing stock value at end of year)		   80000
80000
       ii) Bad debts  A/c                   Dr
   To debtors
(being debtors long overdue written off as bad debts)

Profit & loss           A/c        Dr
    To  Bad debts
(being bad debts written off)

   12000
12000
         12000
12000
    iii) sales A/c                 Dr
  To sales returns
(being sales return accounted for)		   20000
20000
  Trading A/c            Dr
   To purchase
(being purchase accounted for)		   3,50,000
3,50,000
  Trading A/c            Dr
   To freight
(being freight accounted for)		   7000
7000
  Sales A/c                Dr
  To Trading A/c
(being sales accounted for at the end of year)		   500000
500000
  Purchase return  a/c      Dr
   To purchase
(being purchase return accounted for)		   15000
15000
  Trading A/c            Dr
   To factory exp.
(being factory exp. accounted for)		   35000
35000
  Trading A/c            Dr
   To opening stock
(being opening stock accounted for)		   30000
30000


Ans. 3(d)   Date    Particulars        L.F           Amt Dr            Amt  Cr
             i) Honorarium a/c             Dr
    To cash
(being Honorarium paid)		   77000
77000
  Honorarium a/c            Dr
   To Honorarium outstanding
(being unpaid Honorarium accounted for)		   3000
3000
  Profit & Loss a/c           Dr
    To  Honorarium
(being Honorarium accounted for)		   80000
80000
       ii) Profit & Loss a/c           Dr
    To capital a/c
(being surplus accounted for at the end of the year)		   55000
55000


  Ans: 4(a)                    Cement Mixer A/c
    Date    Particulars Amt. Dr.    Date     Particulars Amt. Cr.
July 1995 To Bank A/c(120000x3) 360000
            
360000 		 march 96 By Depreciation A/c(for 9 months)
By bal. c/d		 56250
303750
360000
April1996 To bal. b/d 303750

          
303750		 31march 97 By dep. a/c
By cash a/c
By P&L a/c(loss on sale)
By bal. c/d		 75000
50000
26250
152500
303750
April 1997 To bal. c/d 152500
              
152500  		 31march 98 By dep. a/c
By bal.  c/d		 48787.50
103712.50
152500  
Expected life of each mixer = 4 years
scrap value  = Rs 20000
Annual Depreciation on one machine = 120000  -  20000   = Rs 25000
..................... ..................... ..... 4
For three machine 25000 x 3 = 75000
For 9 months 75000 x 9   = Rs 56250
..................... . 12

Ans 4(b) :       value of capital employed
.....................Capital Employed = Fixed asset + Working Capital
.....................Fixed Asset:
.....................=Fixed Asset    60000
.....................investments     20000
..................... ..................... 80000     
                   
.....................working capital:
.....................current asset =  debtors ..................... 8000
.....................cash and bank ..................... ............. 5000
.....................Accrual                       ..................... ..1400
.....................Prepaid & deferred exp.                ..      2000
.....................Stock                                        .       15000
..................... ..................... .....................             31400
    Less: ...........current liabilities
.................creditors ..................... ... 7000
............. ...Bank o.d ..................... ... 3000
.................Accruals ..................... ....5800
..................... ..................15800 ...... 15800
.................... ..................... ..............15600
              Capital Employed  = 80000 + 15600 = 95600

(b) Quick Assets -----> Debtors + cash& Bank + Accruals
..................... ...........8000    + 5000 .....+ 1400       =  14400

(c) Non-Quick Liabilities -------> Long term loans  = 20000

(d) Debt Equity Ratio =   Debt   =     Long term loans
..................... ............. equity         Shareholders funds
.....................= 20000                 
..................... 90000+10000+600
.....................= 20000      = 100:503 = 1:5.3
.....................100600

Ans 5-
Profit and Loss Appropriation A/c

Particulars

Amount

Assets

Amount

To Int on Cap @15 %
River          -67500
Well -          45000
Spring         56250
Lake -          56250

2,25,000

By P/L A/c 5,06,000
Add annual allowance 27000
less commission 20000

5,13,000

To Well's salary

36000

By Int on drawings
River  4500
Well    3000
Spring 3750
Lake    3750   

15000

To annual allowance

27000

ToInt on loan 9 month

45000

To Reserve fund

20000

To capital A/c   tr to
River  87500
Well   35000
Spring 35000
Lake   17500

1,75,000



               



             

5,28,000

5,28,000
Workings Notes :-
(i) Interest on capitals @ 15% for 9 months for River,Well, Spring, Lake
River   =   6,00,000  x       9     x  15               =        67500
                                       12         100
Well    =    400000   x       9     x   15               =        45000
                                        12         100
Spring  =     500000  x      9       x   15               =        56250
                                         12         100
Lake     =    500000  x       9      x   15               =        56250
                                         12         100
(ii) Interest on drawing @ 10% for 9 months
River    =    60000     x       9      x   10               =        4500
                                         12          100
Well     =     40000     x       9      x   10               =        3000
                                         12          100
Spring   =     50000     x       9      x   10               =      3750
                                         12          100
Lake     =      50000      x      9       x   10               =      3750
                                         12          100
(iii) Profit sharing ratio
River      =      5      x      175000          =    87500
                      10
Well       =      2       x      175000         =     35000
                      10
Spring    =        2       x      175000         =     35000
                      10
Lake      =        1      x      175000         =     17500
                           10
Ans 6 Income & Expenditure A/c for the year ending 31-3-1997
Particulars Amount Particulars Amount
To Expenditure on activities 60,000 By annual celebeartion receipts                     60,000
- payments 45,000		 15,000
To Club Expenses 37,400 By Life membership fees                        60,000

- 40% Capital  24,000

 36,000
To depreciation

Sports Complex   10,000

Furniture                3200

 13,200 By Grant 60,000
To Honorarium 35,000 By refreshment supplies                          1,20,000

- Supplies         75,000

 45,000
To Profit 10,400                   
  1,56,000   1,56,000

Balance Sheet as on 31-03-1997
Particulars Amount Particulars Amount
Life Membership fees 24,000 Cash 27,800
Legacy 3,50,000

+ Further 7,00,000

 10,50,000 Investment 2,75,000
Income & Expenditure 25,000 + Profits                      10,400 35,400 Land 3,00,000
Sports Complex Fund 10,00,000 Furniture                    64,000

Less : Depreciation      3200

 60,800
      Refreshment Supplies 5800
    Sports Complex 10,00,000

+ addition 4,50,000

- Depreciation 10,000

 14,40,000
  21,09,400   21,09,400

 


Exam Paper
Accountancy
ICSE