PART A
(PARTNERSHIP & COMPANY ACCOUNTS)

Q1. What is the nature of Receipts & Payments Account? (1 Mark)

Q2. A and B are partners sharing profits in the ratio of 2:1. C is admitted for 1/4th share. Calculate new and sacrificing ratio. (1 Mark)

Q3. Name the two items that would appear in credit side of Partner’s Capital account when capitals are fixed. (1 Mark)

Q4. How is provision for doubtful debt treated at the time of dissolution of firm? (1 Mark)

Q5. State any two purposes for which Securities Premium A/c can be utilized. (1 Mark)

Q6. How will you deal with the Donation while preparing the final accounts for the year ending on 31/3/08 in each of the following cases: (3 Mark)

(a) During the year 2007-08, donation received Rs.50,000 and it is treated as capital item as per the policy of the club.

(b) During the year 2007-08, donation received Rs.50,000 and 60% of the donation is to be capitalized as per the policy of the club.

Q7. 500 shares of Rs.100 each issued at a discount of 10% were forfeited for non-payment of allotment money of Rs.50 per share. The first and final call of Rs.10 per share on these shares was not made. The forfeited shares were reissued at Rs.80 per share fully paid up. Journalise.(3 Mark)

Q8. A company redeemed its Rs.2,00,000 debentures at 10% premium out of profits. The company has sufficient profits for the purpose. Pass necessary journal entries.(3 Mark)

Q9. A, B and C are partners sharing profits and losses in the ratio 5:3:2. Their capital on 1/1/09 were Rs.1,00,000, Rs.80,000 and Rs.60,000 respectively. They withdrew Rs.500 each on first day of every month. According to their partnership agreement they are allowed interest on capital @ 5% and charged interest on drawings @ 6% per year. The profits for the year 2009 as per Profit and Loss A/c amounted to Rs.1,50,000 out of which Rs.10,000 were transferred to General Reserve. A and B were entitled to a salary of Rs.2,500 and Rs.2,000 per year and C is entitled to a commission of 5% on net divisible profit after charging such commission. Prepare Profit and Loss Appropriation A/c and show your workings clearly. (4 Mark)

Q10. P, Q and R were sharing profits in the ratio of 5:3:2. They decided to share future profits in the ratio of 2:3:5 with effect from 1/4/2009. They decided to record the effect of the following without affecting the book value of Profit & Loss A/c (Cr.) Rs.24,000 and Advertisement Suspense A/c Rs.12,000. Pass the necessary adjusting entry. (4 Mark)

Q11. XYZ Ltd. purchased sundry assets worth Rs.3,81,000 and assumed liabilities of Rs.81,000 from ABC Ltd. The purchase consideration was agreed at Rs.2,80,000. The amount was to be paid by 8%debentures of Rs.100 each at a premium of 25%. Give necessary journal entries. (4 Mark)

Q12. X Ltd. Issued 2,00,000 shares of Rs.10 each payable as Rs.2.50 on application (on 1/1/09), Rs.2.50.on allotment ( on 1/4/09), Rs.3 on first call ( on 1/7/09) and Rs.2 on second & final call (on 1/10/03). All the shares were subscribed and all the sums were duly received. Amit, a shareholder, who had 1,000 shares paid the amount of first and second calls with the allotment.Whereas Sumit, another shareholder, paid the amount of first call with the second call. Company adopted Table A for interest on calls in arrears and calls in advance. Pass necessary journal entries. (6 Mark)

Q13. From the following Receipts & Payments A/c of a club and adjustments prepare Income & Expenditure A/c and Balance Sheet as on 31/12/09: (6 Mark)

Receipts	Rs.	Assets	Rs.
To balance b/d	1,90,000	By salaries	3,30,000
To Subscriptions	6,60,000	By sports equipment	4,00,000
To interest on investments @8%p.a. for full year	40,000	By balance c/d	1,60,000
	8,90,000		8,90,000

Additional information:

• The club had received Rs.20,000 for subscription in 2008 for the year 2009.
• Salaries had been paid for 11 months only.
• Stock of sport equipment on 31/12/08 was Rs.3,00,000 and on 31/12/09 Rs.6,50,000.

Q14. X and Y are two partners sharing profits & losses equally. Give the journal entries at the time of dissolution in the following cases: (6 Mark)

• Deferred revenue advertising expenses appeared at Rs.30,000.
• Realisation expenses paid by the firm amounted to Rs.1,500 and partners have agreed to bear the realization expenses.
• Profit and Loss A/c was appearing on the asset side of balance sheet at Rs.40,000.

Q15. A and B are partners of a firm. They admit C for 1/3rd share. Their Balance Sheet as on 31/03/09 was as under: (8)

Liabilities	Amount	Assets	Amount
Creditors	20,000	Goodwill	12,000
Employees Provident Fund	8,000	Buildings	40,000
Bills Payable	6,000	Machinery	28,000
General Reserve	12,000	Furniture	6,000
Capitals: A	60,000	Stock	26,000
B	40,000	Book Debts	22,000
		Cash	12,000
	1,46,000		1,46,000

On C’s admission it was agreed:

• C should bring Rs.1,00,000 as capital and Rs.5,000 as his share of goodwill.
• Goodwill appearing in the books should be written off.
• Provision for loss on stock and provision for bad debts is to be made at 10% and 5% respectively.
• The value of building is to be taken at Rs.50,000.

Total capitals of the firm has been fixed at Rs.3,00,000 and Partners Capital A/cs are to be adjusted in the profit sharing ratio. Any excess is to be transferred to current a/cs and deficit is to be brought in cash.

OR

The Balance Sheet of X,Y and Z who shared profits in the ratio of 4:3:2 as on 31/03/200 was as follows:

Liabilities	Amount	Assets	Amount
Creditors	7,700	Cash at Bank	6,300
General Reserve	1,800	Debtors 6,000
Capitals:		Less: Provision 300	5,700
X	19,000	Stock	7,000
Y	14,000	Plant & Machinery	10,500
Z	12,000	Buildings	25,000
	54,500		54,500

Y retired on the above date and it was agreed that:

• Stock to be depreciated by 5% and building be appreciated by 5%.
• A provision of Rs.320 be made for legal charges.
• Goodwill of the firm is valued at Rs.14,400 but no goodwill account is to be raised.
• X and Z to share future profits in the ratio 5:3.
• Y to be paid Rs.5,000 in cash and balance to be transferred to his loan account.

X and Z to maintain their capitals in the new profit sharing ratio and to bring in or withdraw cash for the purpose. Capital of the new firm be fixed at Rs.28,000. Prepare ledger accounts and balance sheet of the firm after Y’s retirement.

Q16. X Ltd. was registered with a nominal capital of Rs.2,00,000 divided into 2,000 equity shares of Rs.100 each. 1,000 shares were issued as fully paid to the vendors for purchase of fixed assets. The remaining 1,000 shares were offered for public subscription at a premium of Rs.5 per share payable as Rs10 per share on application, Rs.25 per share (including premium) on allotment, Rs.40 per share on first call and Rs.30 per share on final call. Applications were received for 900 shares which were duly allotted. At the time of the first call, a shareholder who held 100 shares failed to the first call money and his shares were forfeited. These shares were reissued at Rs.60 per share, Rs.70 paid up. Final call was not made. Pass necessary journal entries. (8 Mark)

OR

Abhishek Ltd. invited applications for 50,000 shares of Rs.10 each at a discount of Rs.2 per share payable as Rs.2 on application, Rs.3 on allotment, Rs.2 on first call and Rs.1 on final call. Applications were received for 70,000 shares. Allotment was made as under:

To applicants of 10,000 shares - in full
To applicants of 20,000 shares - 15,000 shares
To applicants of 40,000 shares - 25,000 shares

The shares were fully called and paid up except amounts on allotment, first and final call not paid by those who applied for 2,000 shares out of group applying for 20,000 shares. These shares were forfeited and 1,200 of these shares were reissued @ Rs.7 per shares. Journalise.

PART B
(ANALYSIS OF FINANCIAL STATEMENTS)

Q17. Name two parties who may be interested in analysis of financial statements. (1 Mark)

Q18. How will you treat increase in share capital while preparing cash flow statement as per AS-3 (revised). (1 Mark)

Q19. What are the two major inflow and outflows of cash from investing activities? (1 Mark)

Q20. Under what heading will you classify the following items in the balance sheet of a Company? (3 Mark)
(i) Advances to suppliers
(ii) Goodwill
(iii) Deposit with Custom Authorities
(iv)Debenture Suspense A/c
(v) Acceptances
(vi) Provision for Provident Fund

Q21. From the Balance Sheets as on 31st March 2008 and 2009, prepare the Comparative Balance Sheet: (4 Mark)

Liabilities	2008(Rs.)	2009(Rs.)	Assets	2008(Rs.)	2009(Rs.)
Current Liabilities	4,00,000	7,00,000	Current Assets	8,00,000	14,00,000
Reserves	5,00,000	3,50,000	Fixed Assets	16,00,000	23,00,000
12% Loan	7,00,000	11,00,000
Share Capital	8,00,000	15,50,000
	24,00,000	37,00,000		24,00,000	37,00,000

Q22. Total sales of a company is Rs.8,00,000 and cash sales is Rs.70,000. Average collection period is 25 days, calculate the amount of debtors that will appear in the Balance Sheet. (4)

Q23. From the following Balance Sheets of X Ltd, prepare Cash Flow Statement:(6 Mark)

Liabilities	31/3/06 (Rs.)	31/3/07 (Rs.)	Assets	31/3/06 (Rs.)	31/3/07 (Rs.)
Equity Share Capital	2,00,000	3,50,000	Fixed Assets (Net)	6,10,000	8,60,000
15% Pref. Share Capital	2,00,000	1,50,000	Investments (long term)	30,000	50,000
12% Debentures	1,25,000	2,00,000	Investments (Short term)	5,000	8,000
Reserves	1,10,000	2,50,000	Debtors	80,000	61,000
Bank Overdraft	10,000	12,000	Bank	5,000	2,000
Current Liabilities	83,000	15,000	Cash	1,000	8,000
Tax Provisions	11,000	18,000	Discount on Shares	8,000	6,000
	7,39,000	9,95,000		7,39,000	9,95,000

Additional information:

• Preference Shares were redeemed on 31/3/07 at premium of 10%.
• Dividend at 12% was paid to Equity shares for the year 2006.
• Depreciation provision stood at Rs.1,00,000 and Rs.1,50,000 on 31/03/06 and 31/03/07.

Time Allowed: 3 Hrs.
Maximum Marks:80

General instructions:-
(1) This question paper is divided in two parts.
(2) All parts of a question should be solved at one place
(3) Marks of each question is indicated against the question

PART – A
(Not for Profit Organizations, Partnership Firms and Company Account)

Q.1. Royal sports club sells an old furniture (book value Rs.5,000) for Rs.5,650. Show how the sale would be reflected in the Receipt and Payment account. 1 Can a partner be exempted from sharing the losses in a firm? If yes, under what circumstances (1 Mark)

Q.2. What is the nature of Revaluation Account? (1 Mark)

Q.3. Why there is a need to calculate the value of goodwill of the firm? 1 5. State the purpose for which balance to the credit of securities premium can be utilized. (3 Mark)

Q.4. On the basis of the information given calculate the amount of stationery to be debited to the Income and Expenditure Account of Royal club for the year ended 31st. Dec, 2007: (3 Marks)
Paid for stationery Rs.10,000
Amount due for stationery as on 31-12-2006 Rs. 2,000
Amount due for stationery as on 31-12-2007 Rs. 3,000
Advance for stationery as on 31-12-2007 Rs. 4,000
Advance for stationery as on 31-12-2006 Rs. 1,500
Stock of stationery as on 31-12-2007 Rs. 4,500
Stock of stationery as on 31-12-2006 Rs. 2,000

Q.5. Prayag ltd. Issued 5,00,000, 7% debentures of Rs.50 each. Pass the necessary journal entries in the books of The Company for the issue of debentures when debentures were: (3 Marks)
(I) Issued at par, redeemable at 8% premium.
(II) Issued at 4% premium, redeemable at 5% premium.
(III) Issued at 5% premium, redeemable at par.

Q.6. On 1-4-2005 Rohini ltd. Had made an issue of 3,000,6% debentures of Rs. 100 each. The company during the year 2006-07 purchased for cancellation of 600 of these debentures. The paid Rs. 95 per debenture for 500 debentures and Rs. 98 per debenture for the rest. The expenses on purchase amounted to Rs. 400,. Pass journal entries in the books of the company. (3 Mark)

Q.7. On march31, 2005 after the close of books of accounts, the capital accounts A,B and C stood at Rs. 24,000 , ,Rs. 20,000 and Rs.12,000 respectively. The profits for the year Rs. 36,000 was distributed equally. Subsequently it was discovered that interest on capital 5% had been omitted .The profit sharing ratio was 2:2:1.Pass the necessary journal entries. (4 Mark)

Q.8. Ryan ltd. Issued 2,10,000, 7% debentures of Rs. 100 each on march,31st,2002 redeemable at a premium of 8% on 30th June, 2009. The board of directors decided to transfer the required amount to debenture redemption reserve in three equal annual installments starting with march31, 2007. Record the necessary journal entries regarding issue and redemption of debentures. (4 Mark)

Q.9. X Ltd. Had an authorized capital of Rs. 10,00,000 divided into equity shares of Rs. 10 each. The company Invited applications for 50,000 shares. Applications for 40,000 shares were received. All calls were made and were duly received except the final call of Rs. 2 each on 1,000 shares. 500 of the shares on which the final call was not received were forfeited. Show how share capital will appear in the balance sheet of the company as per schedule vi part I of the companies act 1956. (4 Mark)

Q.10. A, B and C are the partners in a firm sharing profits in the ratio of 4:3:3. The firm was dissolved on 28-02-2005. After transfer of assets and external liabilities to realization account following transaction took place: (4 Marks)
(i) K, a creditor to whom Rs.6,000 were due to be paid, accepted office equipment at Rs. 4,000 and balance was paid to him in cash.
(ii) A Creditor to whom 16,000 were due to be paid took over machinery at Rs. 20,000. Balance was paid to him in cash.
(iii) An unrecorded liability of the firm Rs. 7,500 was paid by A.
(iv) The loss on dissolution was Rs. 10,000. Pass the necessary entries.

Q.11. Following is the Receipt and Payments account of Royal Trust:(6 Marks)

Receipts Amount Payments Amount
-------------------------------------------------------------------------------------------------------------------------------
Cash in hand 14,000 Rent 6,000
Cash at bank 60,000 Salary 12,000
Subscription: Postage 300
2007 5,000 Electricity charges 6,000
2008 83,000 furniture 20,000
2009 3,000 91,000 Books 3,000
Sale of investment 90,000 Defence bonds 1, 50,000
Interest on investment 2,000 Help to needy students 22,000
Sale of furniture (book value Rs.3,000)3,200 Cash in hand 10,900
Cash at bank 30,000
-------------------------------------------------------------------------------------------------------------------------------
2, 60,200 2,60,200
--------------------------------------------------------------------------------------------------------------------------------
Prepare Income and Expenditure Account for the year ended 31st. December, 2008 and a balance sheet as on that date after the following adjustment:
(i) Subscription for 2008, still owing were Rs. 7,000.
(ii) Interest due on Defence bonds was Rs. 7,000.
(iii) Rent still owing was Rs. 1,000.
(iv) The book value of investment sold was Rs. 80,000,Rs. 30,000 of the investment were still in hand.
(v) Subscription received in 2008 including Rs. 400 from a life member. The total furniture on january1, 2008 was worth Rs. 12,000. Salary paid for the year2009 is Rs. 2,000.

Q.12. . P,Q and R were in partnership. They had taken out a joint life policy of Rs. 80,000. On 31st.March, 2008. It’s surrender value was Rs. 30,000. P decided to retire from firm on this date. Balance sheet was as follows:(6 Marks)

------------------------------------------------------------------------------------------------------------------------------
Liabilities Amount Assets Amount
-------------------------------------------------------------------------------------------------------------------------------
Creditors 55,000 Cash 1,000
P’s capital 10,000 Building 40,000
R’capital 1,50,000 Machinery 28,000
S’ capital 1,20,000 Goodwill 15,000
Motor van 27,000
Debtors 24,000
-------------------------------------------------------------------------------------------------------------------------------
Total 1,35,000 1,35,000
-------------------------------------------------------------------------------------------------------------------------------
The following terms were agreed upon:
(i) Goodwill of the firm should be valued at Rs. 21,000.
(ii) The value of building should be appreciated by Rs. 10,000
(iii) Machinery should be reduced to Rs. 23,000.
(iv) Create 5% provision on debtor for bad and doubtful debts.
(v) Create provision of Rs. 700 on debtors.
(vi) The sum payable to P is to be brought in by R and S in such a manner that their capital accounts are in proportion to their profit sharing ratio which is to be equal. The remaining partners decided that joint life policy is tom appear in the Balance Sheet.
(vii) Prepare Revaluation Account, Partner’s capital Account, Bank account and Balance Sheet.

Q.13. Kishore and Mukesh are the partners sharing profits and losses in the ratio of 3:2. Their Balance Sheet as on 31st. March, 2008 were as follows:(8 Marks)

-------------------------------------------------------------------------------------------------------------------------------
Liabilities Amount Assets Amount
-------------------------------------------------------------------------------------------------------------------------------
Creditors 10,000 Cash 10,000
Reserve Fund 30,000 Bank 10,000
Bills Payable 10,000 Building 30,000
Kishore’capital 1,50,000 Machinery 1,00,000
Mukesh’ capital 1,20,000 Patents 10,000
Goodwill 50,000
Motor van 60,000
Debtors 50,000
-------------------------------------------------------------------------------------------------------------------------------
Total 3, 20,000 3, 20,000
-----------------------------------------------------------------------------------------------------------------------------------
Lata admitted on that date for 1/6 th share on the following terms:
(i) Lata would bring Rs. 80,000 as capital and Rs. 50,000 as goodwill.
(ii) Value of machinery is to be depreciated. by 20%. iii) Value of building is to be appreciated by 60%.
(iii) Motor van is valued at Rs. 1,00,000.
(iv) Mr. X a debtor of Rs. 10,000 has become insolvent and only 40 paise in a Rupee could be realized from him.
(v) A provision of Rs. 2,000 is to be made for outstanding legal charges.
(vi) Capital of old partners has to be adjusted on the basis of Lata’s capital by bringing in or withdrawing ion cash old partners as the case may be.
Prepare Revaluation Account, Partner’s capital Account and Balance Sheet.

Or

Manoj, Raj and Bala were the partners sharing profits and losses in the ratio of 5:3:2. Their Balance Sheet as on 31st. December, 2008 were as follows:
-------------------------------------------------------------------------------------------------------------------------------
Liabilities Amount Assets Amount
-------------------------------------------------------------------------------------------------------------------------------
Creditors 6,000 Cash 80,000
Workmen compensation fund 10,000 Furniture 12,000
Bills Payable 4,000 Building 1,00,000
Manoj’capital 80,000 Debtors 10,000
Raj’ capital 60,000 Less: Prov. For d/d 2,000 8,000
Bala’s capital 40,000
------------------------------------------------------------------------------------------------------------------------------
Total 2,00,000 2,00,000
--------------------------------------------------------------------------------------------------------------------------------
Raj died on 30th April,2009. It was agreed that:
(i) Furniture is to be valued at Rs. 10,000.
(ii) Value of building is to be increased by vRs. 9,000.
(iii) Provision for doubtful debts is to be maintained at 10% on debtors.
(iv) Goodwill of the firm is to be valued at two years purchase of average profit of last three years profit which was as follows:
2008 Rs. 40,000
2009 Rs. 35,000
2010 Rs. 30,000
(v) Raj’ s share in profit is to be calculated on the basis of last year sales .Last year’s sale was Rs. 20,00,000. Last year’s profit was Rs. 2,00,000. Current year sale unto death was Rs. 4,00,000.
(vi) Rs. 20,000 was immediately paid to Raj’s executor and balance was transferred to his loan Account.
(viii) Prepare Raj’s capital account to be transferred to his executors account.

Q.14. Surya ltd. Invited applications for 20,000 equity shares of Rs. 10 each at premium of 20%, payable as follows: (8 Marks)
Rs. 3 on application, Rs. 4 on allotment (including premium)
Rs. 2 on first call, Rs. 3 on final call
Applications were received for 50,000 shares and allotment was made as follows:
Cat. I. Applications for 15,000 shares ----------- Nil
Cat. II. Applications for 10,000 shares ----------- full
Cat. III. Applications for 25,000 shares ----------- 10,000 shares
Excess money received on application can be adjusted with allotment only. Ravi to whom 1,000 shares were allotted from III category failed to pay the allotment and calls money and Hari from same category applied for 500 shares failed to pay the the final call money. All the shares of Ravi and Hari were forfeited and reissued @Rs. 8 each share. Pass the necessary journal entries in the books of Surya ltd.

Or

Yes ltd. Invited applications for 40,000 equity shares of Rs. 25 each at a discount of 10%, payable as follows:
Rs. 10 on application, Rs. 10 on allotment
Rs. 2.5 on first and final call.
Applications were received for 60,000 shares and allotment was made as follows:
Cat. I. Applications for 40,000 shares allotted 30,000
Cat. II. Applications for 20,000 shares allotted 10,000
Excess money received on application can be adjusted with allotment only. Mahendra to whom 1,000 share were allotted from I category failed to pay the allotment. His shares were immediately forfeited after allotment. Lal who has applied for 1,600 shares from II category failed to pay the call money and his shares were also forfeited after final call money due.1,300 shares out of forfeited shares were reissued at Rs. 8 each (reissued shares includes all the forfeited shares of Mahendra). Pass the necessary journal entries in the books of Yes ltd.

PART – B
(Analysis of Financial Statements)

Q.15. Quick ratio of a company is 1.5:1. State giving reason whether the ratio will improve ,decline or not change on payment of dividend by the company. (1 Mark)

Q.16. State whether conversion of debentures into equity shares by a financing company will result In inflow, outflow or no flow of cash. 1 19. What are the cash equivalents? (1 Mark)

Q.17. Mention any items under the sub-heading ‘current assets, and any three items under the Sub-heading ‘loans and advances’ of the major heading’current assets loan and advances‘ as per the provisions of schedule VI, part I of the companies Act,1956.? (3 Mark)

Q.18. Prepare comparative Income statement from following:
Particulars 31-03-2007 31-03-2008
-----------------------------------------------------------------------------------------------------------------------------------
Sales( Rs.) 2,00,000 3,00,000
Cost Of Goods Sold(Rs.) 60% of sales 70% of sales
Indirect Expenses(Rs.) 50% of gross profit 40% of gross profit
Income Tax 50% of Net Profit before tax 50% of Net profit before tax
-----------------------------------------------------------------------------------------------------------------------------------(4 Mark)

Q.19. Calculate the current assets of a company from the following information:( 4 Marks)
(i) Stock turnover ratio 6 times.
(ii) Stock in the beginning is Rs. 8,000 more than stock at end.
(iii) Sales Rs. 2,16,000.
(iv) Gross profit 20% on cost.
(v) Current liabilities Rs. 80,000.
(vi) Acid test ratio .75:1.

Q.20. From the following information ,prepare cash flow statement for Pioneer Ltd. (6 Mark)
Liabilities 31-03-2004(Rs.) 31-03-2005(Rs.) Assets 31-03-2004(Rs.) 31-03-2005(Rs.)
----------------------------------------------------------------------------------------------------------------------------------
Equity shares 5,00,000 7,00,000 Patents 1,00,000 95,000
Profit& loss 2,00,000 3,50,000 Equipments 2,00,000 2,30,000
Bank loan 1,00,000 50,000 Furniture 3,00,000 2,70,000
Proposed dividend 50,000 70,000 Investment ------- 1,00,000
Creditors 50,000 45,000 Debtors 80,000 1,20,000
Prov. For taxation 30,000 50,000 stock 50,000 1,30,000
Outstanding rent 5,000 7,000 cash 5,000 27,000
Bank 2,00,000 3,00,000
9,35,000 12,72,000 9,35,000 12,72,000

During the year, equipment costing Rs. 80,000 was purchased. Loss on sale of equipment amounted to Rs. 5,000. Depreciation of Rs. 15,000 and Rs. 3,000 were provided for equipment and furniture.

PART A
PARTNERSHIP AND COMPANY ACCOUNTS

Q.1. Mention two important features of income.(1 Marks)

Q.2. In the absence of any specific conditions in the partnership deed, what are the rules applied regarding the following items:

(a) Salary to partners

(b) Interest on capital (1 Marks)

Q.3. On which side of Profit and Loss Appropriation Account, Partner’s interest on drawings is recorded? (1 Marks)

Q.4. While allowing interest on capital, profit ________ and the balance of capital account _______. (increases, decreases) (1 Marks)

Q.5. Mention the rate of interest payable on debentures issued as collateral security.(1 Marks)

Q.7. On 31 December1998, ABC Ltd. purchased 400 of its own debentures of Rs.100 each, for cancellation, out of which 300 were bought at a market price of Rs.98 per debenture and 100 debentures were purchased at @Rs.99 per debenture.Pass journal entries in the books of the company. (3 Marks)

Q.8. State reason why a company would opt for the issue of debentures where their shares are highly in demand in the market? (3 Marks)

Q.9. A, B and C are partners sharing profits and losses in the ratio 2:1:1, with capitals of Rs.40,000, Rs.30,000 and Rs.20,000 respectively. C’s minimum profit after interest on capitals @6% has been guaranteed to be not less than Rs.10,000. A & B have agreed that if C’s profit falls below the guaranteed sum such deficiency would be shared by them equally. The net profit before interest on capitals is estimated to be Rs.38,400. Prepare profit and loss appropriation account. (4 Marks)

Q.10. A, B and C were partners in a firm. On 1.1.98 their capitals stood at Rs. 50,000/-, Rs. 25,000/- and Rs. 25,000/- respectively. As per the provisions of the partnership deed :
(a) C was entitled for a salary of Rs. 1,500/- pm.
(b) Partners were entitled to interest on capital at 5% p.a.
(c) Profits were to be shared in the ratio of capitals.
The net profit for the year 1998 of Rs. 45,000/- was divided equally without providing for the above terms. Pass an adjustment entry to rectify the above errors.
(4 Marks)

Q.11. Ram and Co. purchased machinery from Mona and Co. for Rs. 400000. A sum of Rs. 175000 was paid by means of a bank draft and for the balance due Ram and Co. issued Equity shares of Rs. 10 each at a discount of 10%. Journalise the above transactions in the books of the Company. (4 Marks)

Q.12. (a) The Balance Sheet of Seema Ltd. disclosed the following information on 1.1.2005. (3 + 3 =6 Marks)

15% Debentures                                                 Rs.1500000
Debenture Redemption Fund                               Rs. 1160000
15% Debenture Redemption Fund Investment     Rs. 1160000

The annual contribution to the Debenture Redemption Fund was Rs. 130000 for the years 2005 and 2006. The debentures were redeemable on 31st December, 2006. The investments were sold for Rs. 1380000 and the debentures were redeemed.

Prepare Debentures A/c, Debenture Redemption Fund A/c and Debenture Redemption Fund Investment A/c for the year 2005-2006.

(b) Pass the journal entries to record the issue and redemption of debentures in the following cases:

(i) 1000, 12% debentures of Rs. 100 each issued at a discount of 5% and redeemable at a premium of 3% after 5 years.
(ii) 10000, 10% debentures of Rs. 100 each issued at a premium of 5% and redeemable at par after 6 years.

Q.13. The following is the Receipts and Payments Account of You Bee Forty Club for the year ending 31st December, 1998: (6 Marks)

Receipts and Payments Account

Receipts	Rs.	Payments	Rs.
To Balance	15,000	By Salaries and wages	16,000
“ Subscriptions:		“ Office expenses	3,500
1997	6,000	“ Sports equipment	34,000
1998	35,000	“ Telephone charges	2,400
“ Donation	5,000	“ Electric charges	3,200
“ Entrance Fees	8,000	“ Travelling expenses	6,500
		“ Balance	3,400
	69,000		69,000

(a) Outstanding subscription for 1998- Rs. 5,500.
(b) Entrance fees to be capitalized.
(c) Outstanding salaries and wages- Rs. 4,000.
(d) Depreciate sports equipment by 25%.

Prepare from the above particulars the Income and Expenditure Account of the Club.

 

Q.15. International Chemical Ltd. was registered with a nominal capital of Rs. 500000 divided into shares of Rs. 100 each. Of these 1000 shares were issued to vendors as fully paid in payment of building purchased. 2000 shares were subscribed for by the public. During the first year Rs. 50 per share were called up. Of the shares subscribed for by the public the amount received at the end of the first year was as follows:

On 1400 share the full amount called;
On 250 shares Rs. 40 per shares;
On 200 shares Rs. 30 per shares;
On 150 shares Rs. 20 per shares;

The directors of the company forfeited those shares on which less than Rs. 40 per share was received. These shares were subsequently reissued at Rs. 30 per share. You are required to show cash book and journal entries in the books of company. (8 Marks)

OR

Q.15. M.K. Sales Company Ltd. issued a prospectus inviting applications for 100000 shares of RS. 10 each at a premium of Rs. 2.50 per share payable as follows:(8 Marks)

On allocation                             Rs. 5
On allotment                             Rs. 5 (including premium)
On first call                               Rs. 2.50

The company received applications for 150000 shares; allotment was made on pro-rata basis. Over subscribed money received on application was adjusted with the amount due on allotment. Mr. Hemant to whom 200 shares were allotted failed to pay the allotment money and the final call; his shares were forfeited after the first call. Later on the shares were reissued to Mohan as fully paid for Rs. 9 per share. Pass journal entries in the books of company for recording the above transactions.

Q.16. Rama and Reshma are partners sharing profits & losses in the ratio of 3:2. The Balance sheet of the firm as on 31-3-05 was as follows: (8 Marks)

Liabilities	Rs.	Assets	Rs.
Capital accounts		Debtors 40000
Rama	75000	Less: BDR 2000	38000
Reshma	45000	Stock	42000
Provident fund	20000	Machinery	27000
Workmen’s accident compensation fund	6000	Bills receivables	32000
General reserve	5000	Bank	31000
Creditors	19000
	170000		170000

They admitted Dipali into partnership on 1-4-05, giving her 1/5th share in future profits on following terms:

(1) Dipali will have to bring such an amount as capital which would be equal to 1/5th of the net assets of the new firm.
(2) Dipali will bring Rs. 10000 as her share of goodwill.
(3) Provision of Rs. 500 be made in respect of outstanding wages.
(4) Machinery to be valued at Rs. 30000 and stock to be reduced by 10%.
(5) Bad debt reserve to be maintained at 7 ½ % on debtors.
(6) For accrued income of Rs. 300, no entry is made in the books.

Prepare Revaluation a/c, Partners’ capital accounts and Balance sheet of the new firm.

OR

Q.16. Raman, Magan and Chaman share profits and losses in ratio of 4:3:2. Magan retires on 31-3-05. The balance sheet of their firm as on 31-3-2005 is as under: (8 Marks)

Liabilities	Rs.	Assets	Rs.
Capital:		Land	45000
Raman	40000	Building	25000
Magan	30000	Plant	22000
Chaman	20000	Motor	6000
Creditors	48000	Furniture	8000
Bills payable	15000	Joint life policy	9000
Joint life policy reserve	9000	Debtors 38000 Less: BDR 2000	36000
Profit & loss a/c	4500	Stock	21000
Workmen’s saving fund	22000	Cash	30000
Workmen’s compensation fund	13500
	202000		202000

Following are the conditions according to which Magan retired:

(1) The total goodwill of the business was valued at Rs. 27000. The goodwill account will not be shown in the Balance sheet after the retirement.

(2) The annual insurance premium Rs. 2400 was paid upto 30-6-05.

(3) The manager Mr. Patel’s three months’ salary is due. Monthly salary is Rs. 600.

(4) The plant is depreciated by Rs. 2000, the cost of land is increased up to Rs. 55000, the joint life policy is surrendered at book value.

(5) An employee of the firm was dismissed. He claimed in the court for Rs. 5000. He lost his claim in the court. Firm has to pay Rs. 500 for legal expenses.

(6) After the retirement, Raman and Chaman will share profits & losses in the ratio of 11:7.

(7) The amount due to Magan should be paid in the form of motorcar, which should be considered at cost price, and the remaining amount should be considered as 10% loan.

Prepare necessary accounts and Balance sheet after retirement of Magan. Give journal entries for goodwill.

PART B
ANALYSIS OF FINANCIAL STATEMENTS

Q.17. Current liabilities of a company is Rs.600,000 . Current Ratio is 3:1 and liquid ratio is 1:1. Calculate value of stock in trade. (1 Marks)

Q.18. State the reasons whether the following would result in an inflow, outflow or no flow of funds. (1 Marks)
(a) Amount transferred to provision for taxation
(b) Redemption of debentures

Q.19. The debt equity ratio of a company is 1:2. Which of the following suggestions would increase, decrease or do not change it. (1 Marks)
(i) Issue of equity shares
(ii) Cash received from debtors

Q.20. What is meant by common size balance sheets? (3 Marks)

Q.21. Rearrange the following items under the heads: (4 Marks)
(a) Loans
(b) Current Liabilities
(c) Provisions

(i) Debentures
(ii) B/P
(iii) Provision for taxation
(iv) Bank Overdraft
(v) Provident Fund
(vi) Unclaimed Dividend
(vii) Proposed Dividend
(viii) Creditors for expenses

Q.22. Inventory Turnover Ratio is 5 times. Sales are Rs. 1,50,000, The firm makes 20% profit on sales. Opening Stock is Rs. 15, 000 more than the closing stock. Calculate the opening and closing stock. (4 Marks)

Q.23. The net profit of a company before tax is Rs. 150,000 as on March 31, 2003, after considering the following:(6 Marks)

Depreciation on Fixed Assets                                 Rs. 15,000
Goodwill written off                                               Rs. 5,000

The current assets and current liabilities of the company in the beginning and at the end of the year were as follows:

                                            March 31, 2002            March 31, 2003
Bills Receivables                                 25,000                     10,000
Bills Payables                                     6,000                        7,500
Debtors                                             11,000                      20,800
Stock in hand                                     12,000                     16,000
utstanding Expenses                              7,000                       4,000
Calculate Cash flow from operating activities.

Time allowed: 3 hours
Maximum marks: 80
General instructions:
(a) The Question paper is divided into two parts A & B.
(b) There are 23 questions in all and all are compulsory.
(c) There is no overall choice, however there is internal choice in the questions of 8
marks.
(d) Be precise and to the point. Draw format and show working notes wherever
necessary.

Part A: Accounting for Not-For Profit Organizations, Partnership Firms & Companies

Q.1. How is life membership fees are treated in the accounts of a non-profit organization? (1 Marks)

Q.2. If the capital accounts of partners are fixed, where will you post the following items: (1 Marks)
(a) Interest on capital
(b) Additional capital

Q.3. What is meant by minimum subscription? (1 Marks)

Q.4. State the types of debentures from security point of view. (1 Marks)

Q.5. What is meant by calls in arrears? (1 Marks)

Q.7. You, the director of a company have invited applications for 20,000 equity shares of Rs 10 each. Applications were received for 28,000 shares. Name the kind of subscription. Give three alternatives for allotting these shares. (3)

Q.8. Victory Ltd issued 20,000 equity shares of Rs 100 each at par on 1st April 2007. The amountwas payable as under: On Application & Allotment Rs 50 per share On 1st April 2007; On 1st & Final call Rs 50 On 30th June 2007. (3 Marks)
All the shares were duly subscribed and paid for except Mohan to whom 1000 shares were allotted failed to pay the final call on its due date which he paid on 1st September 07. Give necessary journal entries assuming that the company follows ‘Table A’ of Companies Act,
1956.

Q.9. A Ltd issued 5,000, 9% Debentures of Rs 100 each at par and also raised a loan of Rs 3,00,000 from bank collaterally secured by Rs 4,00,000, 9% debentures. How will you show the Debentures in the Balance Sheet of the company assuming that the company has recorded the issue of Debentures as collateral security in its books? (3 Marks)

Q.10. Shiv and Shanker were partners in a firm sharing profits in the ratio of 3:2. Their fixed capitals were Rs 1,70,000 and Rs 2,10,000 respectively. The partnership deed provides for the following; (4 Marks)
(a) Interest on capital @ 12% p.a.
(b) Interest on drawings @ 18% p.a. Shiv drew Rs 12,000 on 30.06.06 and Shanker drew Rs 18,000 pm 30.09.06. The profit for the year ended 31st March 2007 was Rs 97,000, which was distributed among the partners without providing for the above adjustments. Pass adjustment entry.

Q.11. A, B & C were partners in the ratio of 2:2:1. The books are closed on 31st March each year. B died on 1st June 2006. As per the terms of deed deceased partner’s share in current accounting year was to be calculated on the basis of average profit of last four years preceding the death of partner. The profits and losses were as under: (4 Marks)
2001-02                     Rs 30,000 Profit
2002-03                     Rs 20,000 Profit
2003-04                     Rs 60,000 Profit
2004-05                     Rs 40,000 Profit
2005-06                     Rs 10,000 Profit
Goodwill of the firm was to be twice the profits amount credited to deceased partner’s account in last five years. You are required to calculate deceased partner’s share in current year’s profit & goodwill & pass necessary journal entries to record this.

Q.12. X Ltd has a balance of Rs 5,00,000 in the profit and loss Account. The company decides to forego the payment of dividend and instead utilizes the profits to repay 12% Debentures of Rs 3,50,000 on June 30th 2008 at a premium of 10%. Debentures interest is payable annually on 31st March. The company also has a balance of Rs 2,00,000 in the Debenture Redemption Reserve Account. Journalize the above transactions in the books of X Ltd. (6 Marks)

Q.13. From the following information prepare Income and Expenditure Account for the year ended 31st March 2007 and Balance Sheet of Mehta Club as at 31st March 2007.
 

Receipts	Rs.	Payments	Rs.
To Balance b/d To Interest on Investments To Donations To Subscriptions To Rent Received To Sale of old Newspapers	2,750 2,875 21,250 35,000 15,000 375	By Furniture By Salaries By Miscellaneous Expenses By Telephone Charges By Fax Machine By Investments By Printing & Stationery By Balance c/d	3,750 18,125 18,125 16,125 7,500 18,750 500 12,250
	77,250		77,250

Additional Information:
Subscriptions received included Rs. 750 for 2007-08. The amount of Subscriptions
Outstanding on 31.032007 was Rs. 625; Salaries during 2006-07 unpaid were Rs. 875 and
Rent receivable was Rs. 250, 60% of the Donations were to be capitalized. Capital Fund as at
31st March 2006 was Rs. 12,750 and club also had investments of Rs. 10,000.

Q.14. A & B were partners in the ratio of 3:2. Due to heavy losses they decided to dissolve their business. Give journal entries for each of the following transactions: (Assume that assets other than cash & Bank and External liabilities have been transferred to Realization Account) (6 Marks)
(a) Furniture of the book value Rs 40,000 was realized at 85%.
(b) Stock appeared in the books at Rs 30,000,1/2 of which was taken over by B at 5% discount.
(c) The remaining stock was accepted by Bank against their loan of Rs 18,000.
(d) B agreed to pay off his wife’s loan of Rs 3,000 and took away unrecorded investments of Rs 2,000 at an agreed valuation of Rs 1,800.
(e) The general reserve appeared in the books at 7,200
(f) The loss on realization amounted to Rs 4,500.

Q15. (a) FAST Ltd forfeited 100 shares of Rs 10 each (Rs 8 called up) for non-payment of allotment of Rs 2 per share & first call of Rs 3 per share. These shares were issued at 5% discount. Of these 75 shares were reissued at Rs 6 per share.
(b) FAST Career Ltd forfeited 100 shares of Rs 10 each (Rs 8 called up) for non payment of allotment of Rs 2 per share & first call of Rs 3 per share. These shares were issued at 5% discount. Of these 75 shares were reissued at Rs 6 per share as fully paid up.
(C) FAST Academic Research Center forfeited 100 shares of Rs 10 each (Rs 9 called up) for non-payment of allotment of Rs 2 per share & first call of Rs 2 per share. These shares were issued at 10% discount. Of these 80 shares were reissued at Rs 6 per share as Rs 8 paid up. (8 Marks)

Part B: Analysis of Financial Statements

Q.17. State any two objectives of preparing cash flow statement. (1 Marks)

Q.18. The Debt equity ratio of a company is 2:3.State which of the following would increase/decrease/not change the
existing ratio: (1 Marks)
(a) Issue of equity shares for cash Rs 1,00,000
(b) Payment to creditors Rs 54,500 in full settlement of Rs 60,000.

Q.19. Calculate the amount of Tax paid from the following information; (1 Marks)
Provision for taxation at the end of the year Rs 31,000
Provision for taxation at the beginning of the year Rs 15,000
Income tax provision created during the year was Rs 43,000.

Q.20. What is a contingent liability explain with suitable example. (3 Marks)

Q.21. Prepare a comparative position statement with the help of following information; (4 Marks)

Particulars	Amounts 2007(Rs)	Amounts 2008 (Rs)
Fixed Assets	2,00,000	3,00,000
Equity share capital	1,00,000	1,00,000
Debentures	80,000	50,000
Investments	20,000	20,000
Working Capital	80,000	1,80,000
Reserves & Surplus	1,20,000	3,50,000

Q.22. A firm had current assets of RS 3,00,000. It then paid a current liability of RS 60,000. After this payment the
current ratio was 2:1. Determine the size of current liabilities and working capital after and before the payment was
made.(4 Marks)

Q.23. Prepare a Cash Flow Statement from the following information: (6 Marks)
 

LIABILITIES	AMOUNTS 2008	AMOUNTS 2007	ASSETS	AMOUNTS 2008	AMOUNTS 2007
Equity Share capital	4,00,000	2,00,000	Building	4,50,000	3,00,000
Pref. Share capital	60,000	80,000	Machinery (NET)	30,000	50,000
15% Debentures	80,000	1,20,000	5% Investments	20,000	50,000
P&L Account	1,10,000	20,000	Sundry Debtors	20,000	60,000
Income Tax Provision	80,000	30,000	Bills Receivables	20,000	10,000
Bills Payable	30,000	10,000	Cash in hand	2,50,000	10,000
General Reserve	40,000	90,000	Misc. Expenditure A/c	10,000	70,000

 

Time Allowed: 3 Hrs.
Maximum Marks:80
General instructions:-
(1)This question paper is divided in two parts.
(2)All parts of a question should be solved at one place
(3)Marks of each question is indicated against the question

PART – A: Not for Profit Organizations, Partnership Firms and Company Accounts

Q.1.How is sale of an old asset treated in case of not for profit organization? (1 Marks)

Q.2.If a partnership deed is absent, how are the profits and losses of the firm are divided among the partners? (1 Marks)

Q.3.What is meant by reconstitution of a partnership firm? (1 Marks)

Q.4.Name the methods for calculating deceased partners share of profits. (1 Marks)

Q.5.What is meant by simple or naked debentures? (1 Marks)

Q.6.From the following extracts of Receipt Payment Account and additional information Compute the amount of income from subscription and show as how they would appear in the income and expenditure account for the year ending 31^st March 2007 and the balance sheet as on that date. (3 Marks)

RECEIPT AND PAYMENT ACCOUNT

FOR THE YEAR ENDING 31^ST MARCH 2007

Receipts	Amount(Rs.)	Payments	Amount(Rs.)
Subscriptions: 2005-06 =7,000 2006-07=30,000 2007-08= 5,000	42,000

Additional information:

(1) Subscription outstanding on 31^st March 2006 was Rs.8,5000
(2) Total subscription outstanding as on 31^st March 2007 18,500
(3) Subscription received in advance as on 31^st March 2006 Rs.4,000

Q.7. Ashish ltd. Purchased a machinery from Heera Traders valuing Rs. 4,00,000 at 10% Trade discount in consideration they paid half the amount through Bank draft and remaining half by issue of Equity share of Rs. 10 each at 10% discount. Pass necessary Journal entries in the books of Asheesh Ltd. (3 Marks)

Q.8. Can A company reissue shares at a discount? If Yes, to what extent? (3 Marks)

Q.9. Pinki,Dipti and Kuku are partners sharing profits and losses in the ratio of 5:4:1.Kaku is given a guarantee that his share of profits in any given year should not be less than Rs.5,000.Defficiency ,if any, would be borne by Pinky and Dipti equally. Profit for the year amounted to Rs.4, 00,000.Record necessary journal entries in the books of the firm showing distribution of profit.

Q.10. Sadhu, pratap and sneha are partners sharing in a firm sharing profits in the ratio of 3:3:2.They decided to share profits equally with effect from 1^st April 2003.On the date the profit and loss account showed the credit balance of Rs.29, 000.Instead of closing the Profit and Loss account it was decided to record and adjustment entry reflecting the change in the profit sharing ratio.You are required to record the necessary journal entries to give effect to the same.

Q.11. A company forfeited 1,300 shares of Rs.10 each issued at a discount of 10% on which application money of Rs.3 per share was paid and balance remain unpaid .These shares were reissued at Rs.9 per share as fully paid up. Pass journal entries on forfeiture and reissue of share.

Q.12. (a)P Ltd. Issued 10,000 debentures of Rs.100 each at a discount of 10 % on the condition that the same will be redeemed at a premium of 10% after two years Pass necessary journal entries for the issue and redemption of these debentures after expiry of two years.

(b)500 12%Debentures of Rs.100 each were converted into 15% Debentures of Rs.100 each issued at a discount of 20%.Pass necessary journal entries.

Q13. The following is the Receipts and Payments account of the City club for the year ended 31^st December, 2006

Receipts	Rs.	Payments	Rs.
To Bal. b/d To Subscriptions 2005 500 2006 15,000 2007 1000 To Life membership fee To sale of scraps To interest on sports fund investment	16,500 12,000 200   2000	By Affiliation fee By Furniture (July 1st ) By sports expenses By sundry expenses By balance c/d	1,000 3,000 2500 15200 14000
	35700		35700

The club has 1600 members each paying an annual subscription of Rs. 10. Subscriptions of Rs. 450 are still in arrears for 2006. Life membership fees are to be transferred to capital fund. Sports expenses are to be met out of the sports fund. On January 2006 the club assets and liabilities includes furniture Rs. 2000, sports fund and 10% sports fund investment at Rs 30000 each. Provide depreciation on furniture @ 20 % p.a. and prepare income and expenditure account for the year ended 31^st December 2006 and a Balance Sheet as on that date.

Q.14. A, B and C are partners sharing profits in the ratio of 5:3:2. The total capital of the firm was Rs. 400000 held by them in their profit sharing ratio. B died on 1^st July 2006 and he is entitled to receive the following items:

I. A salary of Rs. 8000 p.m.

II. His share of goodwill which is to be valued at two years purchase of average profit of last three years

III. His share of profits up to the date of death which is to be calculated on the basis of average profit of last two years.

IV. Interest on capital is allowed @ 5% p.a. but no interest on drawings is to be charged. Amount withdrawn by him up to the date of death is Rs. 15000. the profit for the last three years were as follows: 2007 – Rs. 425000; 2006 – Rs 325000; 2005 - Rs. 300000.A and C shares future profits in the ratio of 3:2. Accounting year ends on December, 31^st every year. Prepare B’s capital account.

Q.15. KBC Ltd. was floated with a capital consisting of 20000 equity shares of Rs. 100 each. It offered 10000 shares of Rs. 100 each at a discount of 5% payable as follows: Rs 30 on application; Rs 35 on allotment; Rs. 30 on first and final call.

Applications were received for 20000 shares. The allotment was made as follows:- Applications for 15000 shares were allotted 10000 shares remaining applications were refused allotment. Money over paid on application was utilized towards some due on allotment. All the money due on shares was duly received. Pass necessary journal entries.

OR

Z Ltd invited applications for issuing 40000 equity shares of Rs. 10 each at a premium of Rs.2 per share the amount was payable as follows:

On application Rs 6 (including Premium) and the balance on allotment. Applications for 50000 shares were received pro – rata allotment was made to all the applicants. Excess money received on application was adjusted towards sums due on allotment. A share holder to whom 8000 shares were allotted failed to pay the allotment money and his shares were forfeited. Later on the forfeited shares were reissued for Rs. 70000 as fully paid up. Pass necessary journal entries in the books of Z ltd. 8

Q.16. A and B are partners in a firm sharing profits in the ratio of 2:1. C is admitted into the firm with 1/4^th share in profit he will bring Rs. 30000 as his capital. Capital of A and B are to be adjusted in their new profit sharing ratio. The balance sheet of A and B as on 31^st March 2008 was as follows:-

Balance Sheet

Liabilities	Amount	Assets	Amount
Creditors Bills Payable General Reserve Capital Accounts: A 50000 B 32000	8000 4000 6000     82000	Cash in Hand Cash at Bank Sundry Debtors Stock in Hand Furniture Machinery Building	2000 10000 8000 10000 5000 25000 40000
	100000		100000

Other terms of agreement are as follows:-

• C will bring in Rs. 12000 as his share of goodwill.
• Building was valued at Rs. 45000 and machinery at Rs. 23000.
• A provision for bad debts is to be created @ 6% on debtors.
• The capital accounts of A and B are to be adjusted by opening current account. Prepare revaluation account, Partners capital account and a new Balance Sheet after admission.

PART – B: Analysis of Financial Statements

Q.17. What is the impact of cash collected from debtors on quick ratio of 1:1.

Q.18. How are the various activities classified according to accounting standard 3 (revised) while preparing the cash flow statement.

Q.19. What is meant by non cash items under cash flow statement?

Q.20. Briefly explain why the creditors and employees are interested in analysis of financial statements.

Q.21. The Profit and loss account of Himani and company for the year ended 31^st March 2007 and 2008 are as follows:

Himani & Company

Profit and Loss Account

Particulars	2007	2008
Net Sales Cost of goods Sold Gross Profit Operating Expenses Net Profit Income Tax 50% on Net Profit	422300 371000 51300 22700 28600 50%	402000 369000 33000 19900 13100 50%

Compare the percentage changes from 2007 to 2008.

Q.22. calculates any two of the following ratios on the basis of information given below:

1. Liquid Ratio
2. Proprietor Ratio
3. Operating Ratio

Sales Rs. 3,40,000;

Cost of Goods Sold Rs 1,20,000

Selling Expenses Rs. 80,000

Administrative Expenses Rs 40,000

Current assets Rs 1,50,000

Current Liabilities Rs 1,05,000

Closing stock Rs 10,000

Fixed Assets Rs 2,80,000

Equity Share Capital Rs. 2,75,000

General Reserve Rs 2,00,000

Q.23 The Balance Sheet of Lemon limited are presented below :

Balance Sheet of Lemon Limited

As at 31 Dec 2006 And 07

Particulars	2006 (Rs.	2007 (Rs)
Fixed Assets Less: Accumulated Depreciation Stock in hand Accounts receivable Cash in Hand Total Equity Share Capital Reserve and surplus 10% Debentures Debenture Redemption premium Accounts payable Outstanding Expenses   Total	7,80,000 (3,00,000) 78,000 85,000 47,000 6,90,000 3,00,000 1,18,000 2,00,000 20,000 38,000 14,000   6,90,000	9,75,000 (2,40,000) 93,000 1,02,000 95,000 10,25,000 5,00,000 3,74,000 1,00,000 10,000, 32,000, 9,000   10,25,000

Additional information:

Cash Dividend paid 45,000

The equipment purchased for cash Rs 4,00,000

Old piece of machinery was sold for Rs 45,000 at a loss of Rs 20.000

Equity Share Capital was issued for cash at par

Debenture were redeemed at a premium of 10 %

Calculate Cash Flow from operating, Investing and Financing activities.

General Instructions :—
1. All questions are compulsory.
2. This question paper contains two part A & B.
3. Marks are indicate every question.
4. All parts of the questions should be attempted at one place

PART-A : Accounting for Not for profit Organisation, Partnership and Company

Q.1. How do you treat amount received from individual as per will in the final Accounts of Not For Profit Organisation. (1 Marks)

Q.2. A partners becomes insolvent,what will be the faith of the firm? (1 Marks)

Q.3.A and B are partners with capital of Rs 200000 and Rs150000.As per the deed they are entitled for interest on capital @ 10%.During the year the firm made a profit of Rs 10000 before appropriation. What is the amount of interest to be allowed to the partners? (1 Marks)

Q.4.What is the utility of Debenture Redemption Reserve? (1 Marks)

Q.5. If a partner wants to retire and balance sheet shows a debit balance of Profit and loss Account of Rs 12000,how it should be treated? (1 Marks)

Q.6. Show the following items in the final Account of Not For Profit Organisation. (3 Marks)

Particulars 31/3/07 31/3/08
Outstanding Locker Rent 2650 3720
Advance Rent Received 900 1300
Locker Rent Received during the year 2007-08 is Rs 9000

Q.7. Sony Ltd reissued 1200 shares out of 2000 forfeited shares at Rs 8 as Rs 9 paid up. These shares were forfeited for non payment of Final call of Rs 2 .Pass Journal entries to Reissue the shares and calculate the amount to be transfer to the capital Reserve. (3 Marks)

Q.8. JK Ltd Purchased machine worth Rs 320000 from Amrit Ltd. Payment was made as Rs 50000 cash and remaining amount by issue of equity shared of the face value of Rs 100 each fully paid at an issue price of Rs 90 each. Pass journal entries in the books of JK Ltd for the above transaction. (3 Marks)

Q.9. A and B are the partners sharing profits in the ratio of 7:5. They agree to admit C their manager, into partnership who is to get 1/6th share in the business which he acquires 1/24th from A and 1/8th from B.C brings in Rs 10000 for his share of capital and required cash for Goodwill. On C ‘s admission goodwill of the firm was valued at Rs 18000.The profit for thr first year after C’s admission was Rs 30000.Give journal entries in connection to C’s admission and distribution of the profit among partners. (4 Marks)

Q.10. Rolic Ltd redeemed 1000, 15% debentures of Rs 100 each by converting them into 12% Preference shares of Rs 50 each at 25% premium and 500 15% debentures were purchasing from open market at Rs 97 for immediate cancellation. Pass Journal entries. (4 Marks)

Q.11. M, N and O are partners in a firm having fixed capital of Rs. 1,50,000; Rs. 75,000 and Rs. 60,000 respectively sharing 5 : 3 : 2. The rate of interest on capital was agreed at 10% per annum but was wrongly credited to them as 12% p.a. Give the necessary adjustment entry to adjust then balances of partner’s capital account (4 Marks)

 

Q.12. Delta Ltd issued Rs 2000000, 8% debentures on 1st April 2008 of the face value Rs 100 at Rs 98 redeemable after 5 years at Rs 104.Iterest paid on these debentures on 30th September and 31st March every year. Income tax deducted is 20%of the amount of interest. Pass journal entries in the books of the company for 2008-09 (6 Marks)

 

Q.14. From the following Balance Sheet of Shilpa & Richa as on 31.12.2008 (6 Marks)

 

LIABILITIES	Rs	ASSETS	Rs
Creditor Shilpa’s Capital Richa’s Capital Provision for Bad Debts General Reserve X loan	30000 10000 10000 2000 11000 5000	Stock Plant Debtors Cash	5000 30000 20000 13000
TOTAL	68000	TOTAL	68000

On that day the firm was dissolved on the following terms:

(a) Shilpa promise to pay X loan and took over stock in trade at Rs 4000
(b) Creditors payable after one month were paid immediately at 6% discount p.a
(c) Debtors realized Rs19000, Plant realized Rs34500
(d) Richa took over an old fan completely written off from the books at Rs300
(e) Expenses on realization were Rs1000
Prepare realization account, partners’ capital account & cash account

Q.15. Weston Ld issued 40000 equity shares of Rs 20 each for public subscription at a premium of Rs 10 payable as follows (8 Marks)

On Application Rs 10 (Including Premium Rs 5)

Balance on Allotment after 30days

Share were oversubscribe to the extend of 30%.The company decided to refuse 4000 shares and money refunded. The Remaining applicants were allotted the shares on pro rata bases. All the applicants paid their due on allotment except Mr Rakesh failed to pay his allotment money on his 500 shares. His shares were later forfeited.

Pass journal entries in the book of the Company.

OR

Leo Ltd. Invited application for issuing 50000 equity shares of Rs 10 each at a discount of Re 1 per share payable as follows:

On Application Rs 3

On Allotment Rs 4 (including premium)

On First and Final call Rs 2

Application were received for 75000 shares and pro rata was made as follows:

Applicant for 40000 shares were allotted 30000 shares on prorata basis.

Applicant for 35000 shares were allotted 20000 shares on prorata basis.

M to whom 1500 shares were allotted out of the group applying for 40000 shares failed to pay allotment and P to whom 600 shares were allotted under the group applying for 35000 shares paid his entire due on allotment. However M paid his due along with his Call money.

Pass journal entries in the books of the company for the above transactions

Q.16.The Balance Sheet of Ram & Shyam who share profits & losses in the ratio 3:1as on 31.12.2008. (8 Marks)
 

LIABILITIES	Rs	ASSETS	Rs
Creditor Ram’s Capital Shyam’s Capital Workmen’s compensation reserve General Reserve	10000 16000 14000   15000 12000	Goodwill Land and building Stock Bills Receivable Debtors 6500 Less:Provision 500 Bank	21000 15000 10000 5000   6000 10000
TOTAL	67000	TOTAL	67000

 

Anil was admitted on 1.1.2009 for 1/5th share on the following terms :

(a) Unaccounted accrued incomes of Rs 100 be accounted for;

(b) The market value of Land & Building be taken as Rs 20,000

(c) Claim as account for Workmen’s Compensation is estimated at Rs 20,000

(d) X an old customer whose account was written off as Bad, has paid Rs 200in full settlement of his dues.

(e) Anil shall bring Rs 10000 for his share of goodwill & proportionate share of his capital to the extend of 1/5th share of profit.

Prepare revaluation a/c, partners’ capital account and Balance Sheet after Anil’s admission

OR

A,B&C are partners in a firm sharing profit in the ratio of 5:3:2.On 31stMarch,2003 their Balance Sheet was as under :

Creditors 11000 Building 20000

Reserves 6000 Machinery 30000

A’s capital 30000 Stock 10000 B’s capital 25000 Patents 11000 C’s capital 15000 70000 Debtors 8000 Cash 8000

Total 87,000 Total 87,000

A died on 30th June 2003. It was agreed between his executors and the remaining partners that:

(a) Goodwill to be valued at 2.5 years purchase of the average profits of previous 4 years less 20% which were 2000:Rs 13000 , 2001 : Rs 12000 ,2002 :Rs20000 ,2003 :Rs 15000.

(b) Patents be valued at Rs 8000;Machinery at Rs 28000;and Building at Rs 25000

(c) Profit for the year 2003-2004 be taken as having accrued at the same rate as that of the previous year .

(d) Interest on capital be provided at 10% p.a.

(e) Half of the amount due to A to be paid immediately to the executor and the balance transferred to executor loan a/c which is payable in two equal instalment with interest of 8% p.a.

Prepare A’s capital a/c , A’s executor a/c and A’s executor a/c Loan Account till loan is paid.

PART-B :ANALYSIS OF FINANCIAL STATEMENT

Q.17. How will you classify Loans given by Tata Finance Company in its Cash Flow Statement. (1 Marks)

Q.18. Give two example of significant non cash transaction. (1 Marks)

Q.19. The market Price of shares of HCCL was Rs 36 per share. If its Price Earning Ratio is 8 times , Calculate the EPS of the company. (1 Marks)

Q.20. Explain the advantages of Analysis of Financial Statement. (3 Marks)

Q.21. Prepare the Common Size Income Statement from the following information. (4 Marks)

 

Particular	31st March 2006	31st March 2007
Gross Sales Sales Return Cost of Goods Sold Operating Expenses Income Tax Rate	106000 6000 70% of Sales 8000 50%	110000 10000 74.8% of sales 9800 50%

Q.22. a)Cash sale of a company are 1/3rd oft the credit sales. Stock Turnover Ratio is 5 times. Closing stock is Rs 8000 more than the opening Stock and Closing debtors are 2/3rd of opening debtors. Closing Debtors are Rs 4000 and Opening Stock was Rs 60000.Gross Profit is 20% of Sales. Calculate Debtors Turn over Ratio.

b) Calculate Debt Equity ratio from the following information: (4 Marks)

Total Assets Rs 1500000
Current Liabilities Rs 600000
Total Debts Rs 1200000

The Question paper is divided in two parts. All the questions are compulsory .

 

PART – A

 

Q.1. What are the features of Receipts and Payments Account? (1 Marks)

Q.2. What is meant by Guarantee of profit to a partner? (1 Marks)

Q.3. Mention any two provisions of the Partnership Act, in the Absence of Partnership deed?(1 Marks)

Q.4. Why is P & L appropriation A/c prepared by partnership firm? (1 Marks)

Q.5. What do you mean by limited liability? (1 Marks)

 

Q.6. From the following informations calculate the amount of subscriptions for the year 2008-09. (3 Marks)

                                                                                                        Rs.

 

subscriptions received during the year                                             90000

subscriptions outstanding 31 March 2008                                       20000

subscriptions outstanding 31 March 2009                                       20000

subscriptions received in advance on 31 March 2008                     20000

subscriptions received in advance on 31 March 2009                     20000

 

subscription of Rs. 5000 are still in arrears for the year 2007-08.

Q.7. X limited forfeited 100 shares of Rs. 10 each, Rs. 6 called up, issued at a discount of 10% to Mahesh on which he had paid Rs. 2 per share. Out of these 80 shares were reissued at Rs. 6/- per share to Suresh. Rs. 8 paid up. (3 Marks)

 

Q.8. B Ltd. issued 2,00,000 shares of rs. 10 each payable as follows :

 

Rs. 2.50 on Application (on 1 Jan)

Rs. 2.50 on Allotment (on 1 April)

Rs. 3.00 on First Call (on 1 July)

Rs. 2.00 on Second & Final Call (on 1 Oct)

 

All the shares were subscribed and all the sums were duly received. Shareholder, Aditya who had 1,000 shares paid the amount of first and second calls with the allotment. Interest was paid to Mr. Aditya on 1 Oct 2009. 3

 

Q.9. A & B started a partnership business on 1 January, 2008. Their capital contributions were Rs. 2,00,000 and Rs. 1,50,000 respectively. The partnership deed provided inter alias that :

 

(a) Interest on capitals at 10% p.a.

(b) A to get a salary of Rs. 2,000 p.m. and B Rs. 3,000 p.m.

(c) Profits are to shared in the ratio of 3:2.

 

The profits for the year ended 31 Dec, 2008 before making above appropriations were Rs. 2,16,000. Interest on drawings amounted to Rs. 2,200 for A and Rs. 2,500 for B. 3

 

 

Q.10. (2 x 2)= 4

 

(A) A & B are partners with capitals of Rs. 18,000 and Rs. 16,000 respectively. They admit C as a partner with 1/5 share in the profits of the firm. C brings Rs. 16,000 as his share of capital. Give Journal entries to record goodwill.

 

(B) A, B & C are partners sharing profit and losses in the ratio of 6 :5 :3. They admit D into the firm. The new partner gets 3/7th share, equally from all the three partners. Calculate new and sacrificing ratio.

 

Q.11. Journalise the following transactions assuming that the face value of each debenture is Rs. 100.

 

(i) 150 debentures issued at Rs. 95 each, repayable at Rs. 100.

(ii) 100 debentures issued at Rs. 95 each, repayable at Rs. 105.

(iii) 80 debentures issued at Rs. 100 each, repayable at Rs. 105.

(iv) 120 debentures issued at Rs. 105 each, repayable at Rs. 100. 4

 

Q.12. From the following Receipts and Payments account of a club and from the information, prepare an Income and Expenditure account for the year ended 31st December, 2004 and the Balance Sheet as on that date:

 

Receipts and Payments Account for the year ended 31st Dec., 2008

 

 

Receipts	Amount	Payments	Amount
To Balance b/d 350 To Subscriptions: 2007 250 2008 1000 2009 200 1450 To Rent received from the use of hall 700 To Profit from entertainment 400 To Sales of newspapers 100	By Salaries 1400 By General Expenses 300 By Electric Charges 200 By Books 500 By Newspaper 400 By Balance c/d 200
	3000		3000

 

(a) The club has 50 members each paying an annual subscription of Rs. 25, subscriptions outstanding on 31st December, 2007 were Rs. 300.

(b) On 31st December, 2008 salaries outstanding amounted to Rs. 100. Salaries paid in 2008 included Rs. 300 for the year 2007.

(c) On 1-1-2008 the Club owned building valued at Rs. 10000, furniture Rs. 1000 and books Rs. 1,000.

(d) Provide depreciation on Furniture at 10 per cent. 6

 

 

 

Q.14. (3 x 2 =6 Marks)

 

(a) X Finance Ltd. has issued 10000 12% debentures in 2000, each Rs. 100, interest payable on June 30 and December 31, every year till the date of redemption. It redeemed 1000 debenture by paying back the money on 31st Dec., 2003. On the same date it also converted 2000 debentures into 19,800 equity shares of Rs. 10/- issued at par. Give journal entries for recording these transactions on December 31, 2003, in the books of X Finance Ltd.

(b) A Company issued debentures of the face value of Rs. 100000 at a discount of 6% on 1st January, 2005. These debentures are redeemable by annual drawings of Rs. 20000 made on 31st December, each year. The directors decided to write off discount based on the debentures outstanding each year. Calculate the amount of discount to be written off in each year. Give journal entries.

 

Q.15. A & B are partners in a firm sharing profits and losses in the ratio of 3 : 2. Their Balance (8 Marks)

Sheet was as follows on 1st January, 2002.

 

BALANCE SHEET

 

Liabilities	Amount	Assets	Amount
Sundry Creditors 15000 Capital Accounts : A 30000 B 25000 55000 General Reserve 40000	Plant 30000 Patents 10000 Stock 20000 Debtors 18000 Cash 32000
	110000		110000

 

C is admitted as a partner on the above date on the following terms:

 

(i) He will pay Rs. 10000 as goodwill for one-fourth share in the profits of the firm.

(ii) The assets are to be valued as under :

Plant at Rs. 32000;

Stock at Rs. 18000;

Debtors at book figure less a provision of 5 percent for Bad Debts.

(iii) It was found that the creditors included a sum of Rs. 1400 which was not to be paid but it was also found that there was a liability for compensation to workers amounting to Rs. 2000.

(iv) C was to introduce Rs. 20000 as capital and the capital of other partners were to be adjusted in the new profits sharing ratio. For this purpose, current accounts were to be opened.

Prepare Revaluation Account, Capital Accounts of all partners. Bank Account and the Balance Sheet of the firm.

 

 

 

Q.16. A company issued for public subscription 75,000 equity shares of Rs. 10 each at a premium of Rs. 2 per share payable as under : (8 Marks)

 

On application Rs. 2 per share, on allotment Rs. 5 per share (including Premium) on Ist call Rs. 2 per share and on second call Rs. 3 per share.

 

Applications were received for 112500 shares. Shares were allotted to the applicants for 90000 shares, the remaining applications being rejected. Money over paid on application was utilised towards sum due on allotment.

 

A, to whom 3000 shares were alloted failed to pay the allotment money and two calls and B to whom 3750 shares were allotted failed to pay two calls. All these shares were forfeited after the final call. 5000 shares including all shares of A were reissued as fully paid shares for Rs. 7.50 per share. 8

 

Give journal entries to record the above transactions in the books of the company.

 

OR

 

Rama Ltd. issued 90000 equity shares of Rs. 10 each at a discount of Re. 1 per share (to be adjusted on allotment) payable as follows :

 

Rs. 3 per share on application

Rs. 2 per share on allotment

Rs. 4 per share on 1st call

 

The subscription list was closed on 1st January, 2008 by which date applications for 120000 shares were received. Allotment was made as follows :

 

List I. Applicants of 15000 shares were allotted in full.

List II. Applicants 45000 shares were allotted 30000 shares on pro-rata basis.

List III. Applicants 60000 shares were allotted 45000 shares on pro-rata basis.

 

All the shareholders paid the amount due on allotment and call except A (who was allotted 3000 shares under List II) and B (who applied for 6000 shares under List III). They did not pay any money due on allotment and 1st call. Their shares were forfeited and reissued at Rs. 6 per share fully paid.

Pass the necessary journal entries to record the above transactions.

 

PART – B

 

Q.17. Name the statement prepared to ascertain short term financial position of the business.(1 Marks)

Q.18. What is the ideal proprietary ratio? (1 Marks)

Q.19. Name two items shown under the heading Reserve and Surplus. (1 Marks)

Q.20. What do you mean by Accounting ratios? Give any three limitations of ratio analysis? (2 Marks)

 

Q.21. Prepare a Comparative Income Statement with the help of the following information : (4 Marks)

particulars                                 2006                                 2007

Sales                                         2000000                           3000000

Gross Profit                               40%                                  30%

Indirect Expenses                      50% of G.P.                       40% of G.P.

Income Tax                                50%                                  50%

 

Q.22. Balance Sheet of A Limited is given below : (6 Marks)

 

BALANCE SHEET

 

Liabilities	Amount	Assets	Amount
Paid up Equity :   Share Capital 400000 15% debentures 200000 P/L A/c (for the current year after taxes) 300000 General Reserve 300000 Current Liabilities 580000	Building 600000 Machinery 120000 Debtors 650000 Stock 350000 Bank 60000
	1780000		1780000

 

Additional Information :

Net Sales for the current year is Rs. 5760000.

 

Compute the following :

(i) Net profit ratio

(ii) Current ratio

(iii) Fixed assets turnover ratio

(iv) Debt equity ratio.

 

Q.1. A & B ARE PARTNERS. A WITHDRAWS RS 800 AT BEIGINING OF EVERY MONTH FOR EIGHT MONTH ENDING & B WITHDRAWS RS 800 AT THE END OF EVERY MONTH FOR NINE MONTHS ENDING AT 2003. CALCULATE INTEREST ON DRAWINGS @ 12% P.A. (2 Marks)

Q.2. WRITE A NOTE ON MINIMUM SUBSCRIPITON? (2 Marks)

 

Q.3. LIST THE SOURCES OF REDEMPTION OF DEBENTURE? (2 Marks)

 

Q.4. LIST THE VAPIOUS METHODS BY WHICH WE CAN ISSUE DEBENTURE? (2 Marks)

 

Q.5. AMAR KARAN & SARAN WERE PARTNERS SHARING PROFITS IN THE RATIO OF 2:2:1.COMMISSION OF RS 1,500 WAS PAYABLE TO AMAR BUT WAS OMITED. PROFITS OF RS 4,80,000 WERE DISTRIBUTED AMONG THE PARTNERS WITHOUT PROVIDING FOR COMMISSION TO AMAR.PASS NECESSARY ADJUSTMENT ENTRY FOR RECTIFICATION. (3 Marks)

 

Q.6. THE PROMISING COMPANY LTD. TOOK OVER ASSETS OF RS 3,50,000 & LIABILITES OF RS 30,000 OF X LTD. FOR A PURCHASE CONSIDERATION OF RS 3,30,000. THE PROMISING COMPANY LTD. PAID THE PURCHASE CONSIDERATIO N BY ISSUING 12% DEBENTURE OF RS 100 EACH AT 10 % PREMIUM. GIVE JOURNAL ENTRIES IN THE BOOKS OF PROMISING LTD. (2 Marks)

 

Q.7. A & B ARE PARTNERS SHARING PROFITS IN THE RATIO OF 5:3. THEY ADMIT C IN THE FIRM FOR 3/10^TH SHARE IN PROFIT WHICH HE TAKES 2/10^TH FROM A & 1/10^TH FROM B. C BRINGS RS 30,000 AS PREMIUM IN CASH OUT OF HIS SHARE OF RS 7,800. GOODWILL A/C DOES NOT APPEAR IN THE BOOKS OF A & B. GIVE NECESSARY JOURNAL ENTRIES IN THE BOOKS OF THE FIRM. (4 Marks)

 

Q.8. PASS THE JOURNAL ENTRIES FOR THE FOLLOWING AT THE TIME OF DISSOLUTION OF THE FIRM :

- SALE OF ASSETS RS 50,000

-> PAYEMENT OF LIABILITES RS 10,000

- A COMMISION OF 5% ALLOWED TO MR X A PARTNER ON SALE OF ASSETS. (4 Marks)

 

Q.9.WHAT IS MEANT BY ISSUE OF SHARES AT DISCOUNT ? EXPLAIN THE PROVISION OF SECTION 79 OF THE COMPANIES ACT REGARDING ISSUE OF SHARES AT DISCOUNT. (4 Marks)

 

Q.10. JOURNALISE THE BELOW TRANSATION ASSUMING THAT THE DEBENTURE WERE CONVERTED AT THE OPTION OF THE DEBENTUREHOLDERS BEFORE THE DATE OF REDEMPTION

X LTD. REDEEMED 5,000, 12% DEBENTURE OF RS 100 EACH WHICH WERE ISSUED AT 94 BY CONVERTING THEM INTO EQUITY SHARES OF RS 100 EACH AT 25% PREMIUM.

 

X LTD. REDEEMED 2,000 14% DEBENTURE OF RS 100 EACH WHICH WERE ISSUED AT A DISCOUNT OF 5% BY CONVERTING THEM INTO EQUITY SHARES OF RS 10 EACH ISSUED AY DISCOUNT OF 5 %. (4 Marks)

 

Q.11. P LTD. ISSUED RS 4,00,000 10% DEBENTURE OF RS 100 EACH AT PAR , REDEEMABLE AT 5% PREMIUM AT THE OPTION OF DEBENTUREHOLDERS. ONE DEBENTURES HOLDING 200 DEBENTURE EXERCISED HIS OPTION. PASS JOURNAL ENTRIES TO RECORD THE ISSUE & CONVERSION OF DEBENTURES. (4 Marks)

 

Q.12. SONAM LTD. ISSUED20,000 SHARES OF RS 10 EACH AT A DISCOUNT OF RS 1 PER SHARE PAYABLE AS FOLLOWS:

RS 2.50 PER SHARE ON APPLICATION

RS 4.00 PER SHARE ON ALLOTMENT

RS 2.50 PER SHARE ON 1^ST & FINAL CALL.

SUBSCRIPITON LIST WAS CLOSED ON 1^ST JANUARY,1994 BY WHICH DATE APPLICATION FOR 45,000 SHARES HAD BEEN RECEIVED. ALLOTMENT WAS MADE AS FOLLOWS:

LIST A --APPLICANTS FOR 5,000 SHARES WERE ALLOTED IN FULL.

LIST B - APPLICANTS FOR 10,000 SHARES WERE ALLOTED 5,000 SHARES ON PRO-RATA BASIS.

LIST C -APPLICANTS FOR 30,000 SHARES WERE ALLOTED 10,000 SHARES ON PRO-RATA BASIS.

APPLICATION MONEY IN EXCESS OF THAT REQUIRED ON ALLOTMENT COULD BE UTILIZED FOR CALLS.

ALL THE SHAREHOLDERS PAID THE AMOUNTS DUE ON ALLOTMENT & CALLS EXCEPT Y (WHO WAS ALLOTTED 400 SHARES UNDER LIST B ) & Z (WHO WAS ALLOTED 200 SHARES UNDER LIST C ). BOTH OF THESE SHAREHOLDERS PAID ONLY THE APPLICATION MONEY.

THEIR SHARES WERE DULY FORFEITED & WERE RE – ISSUED AT RS 7 PER SHARE FULLY PAID. PASS THE NECESSARY JOURNAL ENTRIES. (6 Marks)

 

Q.13. THE BALANCE SHEET OF J,K & L WHO WERE SHARING PROFITS IN 5:3:2,IS GIVEN BELOW AS ON 31^ST/MARCH/2003:

LIABILITES	RS	ASSETS	RS
SUNDRY CREDITORS	78,600	LAND	1,85,000
J’S CAPITAL	5,78,800	BUILDINGS	2,87,000
K’S CAPITAL	3,47,800	PLANT&MACHINERY	3,86,000
L’S CAPITAL	2,37,900	STOCK	1,85,000
		DEBTORS	92,100
		CASH	1,08,000
	12,43,100		12,43,100

L RETIRES ON THE ABOVE DATE & THE FOLLOWING ADJUSTMENTS IN THE VALUE OF ASSETS & LIABILITES WERE AGREED UPON:

- LAND WAS UNDER VALUED BY RS 1,20,000;PLANT & MACHINERY OVERVALUED BY RS 35,000.

- PROVISION FOR DOUBTFUL DEBT WAS REQUIRED FOR RS 6,000.

- GOODWILL WAS VALUED AT RS 3,00,000 & WAS TO BE ADJUSTED AGAINST THE CAPITAL OF REMAINING PARTNERS.

- L WAS PAID RS 75,000 IMMEDIATELY & THE BALANCE AMOUNT WAS TO BE TRANSFERRED TO HIS LOAN A/C. PREPARE CASH A/C; REVALUTION A/C; CAPITAL A/C & BALANCE SHEET OF THE RECONSTITUTED FIRM ON THE ABOVE DATE. (6 Marks)

OR

 

A, B&C WERE PARTNERS WHOSE BALANCE SHEET AS ON 31^ST/DEC/1987 WAS AS BELOW:

LIABILITES	RS	ASSETS	RS
CREDITORS	7,096	CASH AT BANK	6,496
GENERAL RESERVE	3,000	DEBTORS	9,000
CAPITAL: A’S-8,000 B’S-6,000 C’S-4,000	18,000	STOCK	10,600
		FURNITURE	2,000
	28,096		28,096

B RETIRED ON THAT DATE & FOLLOWING ADJUSTMENT WERE DONE:

- TO REDUCE STOCK & FURNITURE BY 5% & 10%.

- TO PROVIDE DOUBTFUL DEBTS 5% ON DEBTORS.

- RENT OUTSTANDING WAS RS 260;GOODWILL WAS VALUED AT RS 4,200.

A & C DECIDED TO SHARE PROFITS&LOSSES IN 5:3;NOT TO SHOW GOODWILL IN THE BOOKS;READJUST THEIR CAPITALIN THE PROFIT SHARING RATIO;BRING IN SUFFICIENT CASH TO PAY OFF “B” IMMEDITELY & TO LEAVE A BALANCE OF RS 1,000 IN THE BANK. PREPARE NECCESARY A/C’S. (6 Marks)

 

Q.14. A & B ARE PARTNERS OF 3:2 AS ON 1^ST/JAN/1999.THEIR BALANCE SHEET AS FOLLOWS:

LIABILITES	RS	ASSETS	RS
SUNDRY CREDITORS	51,000	GOODWILL	15,000
WORKMEN’S COMPENSATION FUND	4,000	PROFIT & LOSSA/C	15,000
CAPITAL:-- A---1,00,000 B--- 1,20,000	2,20,000	PLANT	75,000
		PATENTS	8,000
		STOCK	80,000
		DEBTORS	62,000
		CASH	20,000
	2,75,000		2,75,000

ON THIS DATE THEY AGREED TO ADMIT C ON FOLLOWING TERMS:

- C WILL GET 3/10^TH SHARE WHICH HE SHALL ACCQUIRE 1/5^TH FROM A & 1/10^TH FROM B.HE WILL BRING IN RS 60,000 AS HIS CAPITAL.

- GOODWILL OF THE FIRM WAS RS 40,000 & PARTNERS DECIDE TO WRITE OFF GOODWILL FROM THE BOOKS OF NEW FIRM.

- PLANT IS VALUED AT RS 60,000 & STOCK AT RS 70,000.

- CLAIM ON A/C OF WORKMEN’S COMPENSATION FUND IS RS 6,000.

- PATENTS SHOULD BE WRITTEN OFF.

- INVESTMENTS OF RS 5,000 WHICH DIDN’T APPEAR IN THE BOOKS SHOULD BE DULY RECORDED.

- B IS TO WITHDRAW RS 20,000 IN CASH. GIVE JOURNAL;REVALUATION A/C & PARTNERS CAPITAL A/C OF NEW FIRM. (8 Marks)

 

OR

 

A , B & C WERE CARRYING ON BUSINESS WITH THE FOLLOWING ASSETS WITH EFFECT FROM 1/1/1980. FURNITURE RS 18,000, MACHINE RS 72,000 ; CASH RS 10,000; DEBTORS RS 20,000. THEIR RATIO IS 5:3:2.CAPITAL IS ALSO SHARED IN SAME RATIO. B DIED ON 31/6/1980. HIS SON CLAIMED HIS FATHER‘S INTEREST IN THE FIRM

 

THE FOLLOWING WAS THE SETTLEMENT:

ALLOW HIS CAPITAL TO HIS CREDITON THE DATE OF DEATH.

GIVE 5% P.A. INTEREST ON HIS CAPITAL .

HE HAD BEEN DRAWING @ RS 600 PER MONTH WHICH HE WITHDRAWS AT THE BEGINNING OF EACH MONTH. HE BE ALLOWED TO RETURN THESE DRAWINGS AS A PART OF HIS SHARE OF PFOFIT.

INTEREST @ 6% P.A. BE CHARGED ON HIS DRAWINGS.

THEY HAD SEPARATE LIFE POLICES FOR WHICH THE PREMIUM HAD BEEN PAID OUT OF PROFIT & LOSS A/C OF THE FIRM: A RS 50,000; B RS 60,000; C RS 30,000. THE SURRENDER VALUE OF A’S POLICY WAS 50% WHEREAS OF C’S POLICY IT WAS 40%.

GOODWILL WAS EVALUATED TWICE THE AVERAGE OF PROFITS WHICH WERE RS 3,600.PREPARE B’S PERSONAL A/C.

 

Q.15. A,B & C ARE PARTNERS OF 3:2:1.ON 31^ST/DEC/2003 THEIR BALANCE SHEET WAS AS FOLLOWS:

LIABILITES	RS	ASSETS	RS
CREDITORS	65,000	CASH	22,500
BILL PAYABLE	20,000	DEBTORS	52,300
PROVIDENT FUND	12,000	STOCK	36,000
INVESTMENT FLUCTUATION FUND	6,000	INVESTMENT	15,000
COMMISSION RECEIVED IN ADVANCE	8,000	PLANT	91,200
CAPITAL A/C’S: A---80,000 B---50,000 C---30,000	1,60,000	PROFIT & LOSS A/C	54,000
	2,71,000		2,71,000

ON THIS DATE THE FIRM WAS DISSOLVED.A WAS APPOINTED TO REALISE THE ASSETS.A WAS TO RECEIVE 5% COMMISSION ON THE SALE OF ASSETS(EXCEPT CASH) & WAS TO BEAR ALL EXPENSES OF REALISATION

A REALISED THE ASSETS AS FOLLOWS:

DEBTORS-RS 30,000;STOCK-RS 26,000;INVESTMENT 75% OF BOOK VALUE;PLANT-RS 42,750.EXPENCES ON REALISATION AMOUNTED TO RS 4,100.COMMISSION RECEIVED IN ADVANCE WERE RETURNED TO THE CUSTOMERS AFTER DEDUCTING RS 3,000.FIRM HAD TO PAY RS 7,200 FOR OUTSTANDING SALARY NOT PROVIDED FOR CASH.COMPENSATION PAID TO EMPLOYEES AMOUNTED TO RS 9,800.THE LIABILITY WASN’T PROVIDED FOR IN THE ABOVE BALANCE SHEET. RS 25,000 HAD TO BE PAID FOR PROVIDENT FUND.PREPARE REALISATION;CAPITAL & CASH A/C’S. (6 Marks)

 

 

PART B

(ANALYSIS OF FINANCIAL STATEMENTS)

WHO ARE VARIOUS ACTIVIES CLLASIFIED ACCOPRDING TO AS-3 (REVISED) WHILE PREPARING THE CASH FLOW STATEMENT.

Q.16. FOR CALCUTING CASH FROM OPERATING ACTIVIES, FROM THE GIVEN FIGURE OF NET PROFIT EARNED DURING A YEAR , HOW WOULD YOU DEAL WITH THE FOLLOWING:

(a) DECERASE IN STOCK
(b) INCREASE IN DEBTORS
(c) IN CREDITORS
(d) REDEMPITION OF DEBENTURES (2 Marks)

 

Q.17. NAME THE MAJOR HEADINGS UNDER WHICH THE LIABILITES & THE ASSETS SIDES OF A COMPANY’S BALANCE SHEET IS ORGANISED & PRESENTED. (3 Marks)

Q.18. CALCUATE THE TREND PERCENTAGE FROM THE FOLLOWING INFORMATRION TAKING YEAR ENDING 1996 AS THE BASE YEAR (3 Marks)

CURRENT ASSETS	1996	1997	1998	1999
STOCK	1,00,000	1,25,000	1,40,000	1,50,000
DEBTORS	50,000	60,000	75,000	1,00,000
CASH AT BANK	10,000	15,000	25,000	20,000
OTHER CURRENT ASSETS	40,000	30,000	60,000	50,000
	2,00,000	2,30,000	3,00,000	3,20,000

 

 

Q.19. X LTD. HAS A CURRENT RATIO OF 4.5:1 & QUICK RATIO OF 3:1. IF ITS INVENTORY IS RS 36,000, FIND OUT ITS TOTAL CURRENT ASSETS, & TOTAL CURRENT LIABILITES & QUICK ASSETS.

TOTAL DEBT RS 9,00,000. CAPITAL EMPLOYED RS 12,00,000; CURRENT LIABILITES RS 1,00,000; CALCULATE THE DEBT-EQUITY RATIO. (2 Marks)

Q.20. FILL IN THE BLANKS: (6 Marks)

PARTICULARE	1	2	3	4	5	6
Cash flow from financing activity	3	(3)	?	6	9	2
Cash & cash equivalent at the beginning	5	?	1	?	?	(2)
Cash flow from operating activity	1	1	(1)	(2)	?	?
Cash & cash equivalent at the end	?	1	?	2	5	(3)
Cash flow from investing activites	2	(2)	2	?	(6)	3
Net increase /decrease in cash & cash equivalent	?	?	(2)	nil	6	?

 

OR

 

FROM THE FOLLOWING PARTICULARS OF BHARAT LTD. , CALCULATE CASH FLOWS FROM INVESTING ACTIVIES: (6 Marks)

LIABILITES	2001	2002	ASSETS	2001	2002
			GOODWILL	1,00,000	3,00,000
			PATENTS	2,80,000	1,60,000
			PLANT & MACHINERY	10,20,000	12,40,000
			10% LONG-TERM INVESTMENTS	60,000	1,60,000
			SHARE OF X LTD.	1,00,000	1,00,000
			INVESTMENT IN LAND	1,00,000	1,00,000

ADDITIONAL INFORMATION:

 

PATENTS WERE WRITTEN OFF TO THE EXTENT OF RS 40,000 & SOME PATENTS WERE SOLD AT A PROFIT OF RS 20,000

A MACHINE COSTING RS 1,40,000(DEPERATION PROVIDED THEREON RS 60,000) WAS SOLD FOR RS 50,000. DEPERATION CHARGED DURING THE YEAR WAS RS 1,40,000.

ON 31^ST/DEC/2002 10% INVESTMENT WERE PURCHASED FOR RS 1,80,000 & SOME INVESTMENTS WERE SOLD AT A PROFIT OF RS 20,000. INTEREST ON INVESTMENTS WAS RECEIVED ON 31^ST/DEC/2002.

X LTD PAID DIVIDENT @ 10% ON ITS SHARE.

A PLOT OF LAND WAS PURCHASED OUT OF SURPLUS FUND FOR INVESTMENT PURPOSES & LET OUT FOR COMMERCIAL USE
& RENT RECEIVED RS 30,000.