CA PE II Group I : Accounting - June 2009

CA PE II - Group I • Accounting • June 2009

This Paper has 15 answerable questions with 1 answered.

Roll No…………
Total No. of Questions — 6]	[Total No. of Printed Pages —4
Time Allowed : 3 Hours	Maximum Marks : 100

Answers to questions are to be given only in English except in the cases of candidates who have opted for Hindi medium. If a candidate who has not opted for Hindi medium, answers in Hindi, his answers in Hindi will not be valued.

Answer all Questions

Wherever appropriate suitable assumptions should be made by the candidate.

Working notes should form part of the answer.

Marks

Following is the Balance Sheet of M Ltd. as at 31^st March, 2008:

Liabilities	Rs.	Assets	Rs.
15,000, 10% Preference shares of Rs.100 each 35,000 Equity shares of Rs.100 each Securities Premium account 7% Debentures of Rs.100 each Creditors Loan from Director	15,00,000 35,00,000 1,00,000 5,00,000 12,50,000 1,50,000	Goodwill Land & Buildings Plant & Machinery Stock Debtors Cash at bank Preliminary expenses Profit & Loss A/c	3,50,000 15,00,000 10,00,000 6,00,000 15,00,000 1,00,000 4,00,000 15,50,000
	70,00,000		70,00,000

No dividend on Preference shares has been paid for the last 5 years.
The following scheme of reorganization was duly approved by the court:

(i)	Each Equity share to be reduced to Rs.25.
(ii)	Each existing Preference share to be reduced to Rs.75 and then exchanged for 1 new 13% Preference share of Rs.50 each and 1 Equity share of Rs.25 each.
(iii)	Preference share holders have forgone their right for dividend for four years. One year’s dividend at the old rate is however, payable to them in fully paid equity Shares of Rs.25.
(iv)	The Debenture holders be given the option to either accept 90% of their claims in cash or to convert their claims in full into new 13% Preference shares of Rs.50 each issued at par. One half (in value) of the debentureholders accepted Preference shares for their claims. The rest were paid cash.
(v)	Contingent liability of Rs.1,50,000 is payable, which has been created by wrong action of one Director. He has agreed to compensate this loss out of the loan given by the Director to the company.
(vi)	Goodwill does not have any value in the present. Decrease the value of Plant and Machinery, Stock and Debtors by Rs.4,00,000, Rs.1,00,000 and Rs.1,50,000 respectively. Increase the value of Land and Buildings to Rs.18,00,000.
(vii)	40,000 new Equity shares of Rs.25 each are to be issued at par, payable in full on application. The issue was underwritten for a commission of 4%. Shares were fully taken up.
(viii)	The total expenses incurred by the company in connection with the scheme excluding underwriting commission amounted to Rs.15,000.

Pass necessary Journal Entries to record the above transactions.

(1)

(a)

The Balance Sheets of X Ltd. as on 31^st March, 2008 and 31^st March, 2009 are as follows:

Liabilities	2008 Amount (Rs.)	2009 Amount (Rs.)	Assets	2008 Amount (Rs.)	2009 Amount (Rs.)
Share Capital General Reserve Profit and Loss A/c Sundry Creditors Bills Payable Outstanding Expenses	5,00,000 50,000 1,00,000 1,53,000 40,000 7,000	7,00,000 70,000 1,60,000 1,90,000 50,000 5,000	Land and Buildings Plant and Machinery Stock Sundry Debtors Cash	80,000 5,00,000 1,00,000 1,50,000 20,000	1,20,000 8,00,000 75,000 1,60,000 20,000
	8,50,000	11,75,000		8,50,000	11,75,000

Additional Information:

(a)	Rs.50,000 depreciation has been charged to Plant and Machinery during the year 2009.
(b)	A piece of Machinery costing Rs.12,000 (Depreciation provided there on Rs.7,000) was sold at 60% profit on book value.

You are required to prepare Cash flow statement for the year ended 31^st March 2009 as per AS 3 (revised), using indirect method.

(0)

(b)

S Ltd. grants 1,000 options to its employees on 1.4.2005 at Rs.60. The vesting period is two and a half years. The maximum period is one year. Market price on that date is Rs.90. All the options were exercised on 31.7.2008. Journalize, if the face value of equity share is Rs.10 per share.

(0)

(a)

Z Ltd. has three departments and submits the following information for the year ending on 31^st March, 2009:

	A	B	C	Total (Rs.)
Purchases (units) Purchases (Amount) Sales (Units) Sales (Units) Closing Stock (Units)	6,000 6,120 40 600	12,000 11,520 45 960	14,400 14,976 50 36	6,00,000

You are required to prepare departmental trading account of Z Ltd., assuming that the rate of profit on sales is uniform in each case.

(0)

(b)

The Balance Sheet of Amitabh, Abhishek and Amrish as at 31.12.2008 stood as follows:

Liabilities		Amount Rs.	Assets		Amount Rs.
Capital: Amitabh Abhishek Amrish Creditors General Reserve Investment Fluctuation Reserve	60,000 40,000 40,000	1,40,000 25,800 8,000 2,400	Land & Buildings Investments Goodwill Life Policy (at surrender value): Amitabh Abhishek Amrish		74,000 10,000 37,800 2,500 2,500 1,000
			Stock Debtors Less: Provision for doubtful debts Cash & bank balance	20,000 1,600	20,000 18,400 10,000
		1,76,200			1,76,200

Amrish died on 31^stMarch, 2009, due to this reason the following adjustments were agreed upon:

(i)	Land and Buildings be appreciated by 50%.
(ii)	Investment be valued at 6% less than the cost.
(iii)	All debtors (except 20% which are considered as doubtful) were good.
(iv)	Stock to be reduced to 94%.
(v)	Goodwill to be valued at 1 year’s purchase of the average profits of the past fiveyears.
(vi)	Amrish’s share of profit to the date of death be calculated on the basis of average profits of the three completed years immediately preceeding the year of death.

The profits of the last five years are as follows:

Year
2004
2005
2006
2007
2008

Rs.
23,000
28,000
18,000
16,000
20,000
1,05,000

The life policies have been shown at their surrender values representing 10% of the sum assured in each case. The annual premium of Rs.1,000 is payable every year on 1^st August.

Give the necessary Journal Entries in the books of account and prepare the Balance Sheet of the re–constituted firm.

(0)

(a)

The M. Water Works Company Limited decides to replace one of its old plants with a modern one and large capacity. The cost of plant when installed in 1985 was Rs.48 lakhs. The components of materials, labour and overheads are in the ratio of 5: 3: 2. It is ascertained that the costs of materials and labour have gone up by 40 percent and 80 percent respectively. The proportion of overheads to total cost is expected to remain the same as before.

The cost of the new plant as per improved design is Rs.120 lakhs and in addition, material recovered from the old plant of a value of Rs.4,80,000 has been used in the construction of the new plant. The old plant was scrapped and sold for Rs.15,00,000.

Show the Journal Entries and Ledger Accounts in the books of M. Water Works Company Ltd.

(0)

(b)

The following information is presented by Mr. Z, relating to his holding in 9% Central Government Bonds.

Opening balance (face value) Rs.1,20,000, Cost Rs.1,18,000 (Face value of each unit is Rs.100).

1.3.2008
1.7.2008
1.10.2008
1.11.2008

Purchased 200 units, ex–interest at Rs.98.
Sold 500 units, ex–interest out of original holding at Rs.100.
Purchased 150 units at Rs.98, cum interest.
Sold 300 units, ex–interest at Rs.99 out of original holdings.

Interest dates are 30^th September and 31^st March. Mr. Z closes his books every 31^st December. Show the investment account as it would appear in his books.

(0)

(a)

With the help of the following information prepare statement of affairs of Mr. Zenith, who was declared insolvent under the Presidency Town Insolvency Act, 1909.
His capital was Rs.3,500 and his drawings were Rs.3,500.
His assets consist of:

(i)	Stock (book value Rs.7,500) estimated to produce Rs.4,500.
(ii)	Freehold house (private property) valued at Rs.10,000, the deed of which was lodged with the bank as security for an overdraft on business account Rs.4,000.
(iii)	Book–debts Rs.5,000 of which Rs.4,000 was considered good and the balance estimated to produce Rs.500.
(iv)	His life policy (Surrender value Rs.3,000) was given as a part security for a private loan of Rs.5,000.
(v)	Machinery (Book value Rs.8,000) Cost price Rs.9,000, Estimated to produce Rs.5,500.

His unsecured creditors amounted to Rs.20,150 and he owed Rs.250 to his clerk being salary for two months just preceding the date of his insolvency.

(0)

(b)

Following is the Balance Sheet of M/s Z Ltd. as on 31^st March, 2009:

Liabilities	Rs.	Assets	Rs.
80,000, 6% Redeemable Preference shares of Rs.10 each Rs.9 paid up. 40,000 Equity shares of Rs.10 each fully paid Securities premium Profit and Loss Account General Reserve Sundry Creditors	7,20,000 4,00,000 1,00,000 5,00,000 60,000 4,20,000	Sundry Assets Cash	16,80,000 5,20,00
	22,00,000		22,00,000

By the terms of their issue, the preference shares were redeemable at a premium of Rs.0.50 per share on 1^st April, 2009, and it was decided to arrange for this, as far as possible, out of the companies resources subject to leaving a credit balance of Rs.24,000 in the profit and loss a/c. It was also decided to raise the balance of funds required by the issue of sufficient number of equity shares at a premium of 10%.

Show the necessary Jou rnal Entries giving effect to the above transactions and the Balance Sheet thereafter.

(0)

Answer any four of the following:

5x4=20

(a)

A major fire has damageed the assets in a factory of a Limited Company on 5th April – five days after the year end and closure of accounts. The loss is estimated at Rs.10 crores out of which Rs.7 crores will be recoverable from the insurers. Explain briefly how the loss should be treated in the final accounts for the previous year.

(0)

(b)

Explain the types of lease as per AS 19.

(0)

(c)

Explain the criteria of identification of Reportable Segments as per AS 17.

(0)

(d)

Explain the use of accounting information in Agricultural farm.

(0)

(e)

Describe the structure of Government Accounts.

(0)

(f)

Goods purchased on 24.2.2008 of US $ 1,000
Exchange rate on 31.3.2008
Date of actual payment 05.06.2008

Rs.46.60 per US $
Rs.47.00 per US $
Rs.47.50 per US $

Calculate the loss/gain for the financial year 2007–2008 and 2008–2009 as per AS 11.

(0)

Disclaimer ♣ Privacy Policy ♣ Who We Are ♣ Terms of Service