CA PE II - Group I : Accounting - November 2009

CA PE II - Group I • Accounting • November 2009

This Paper has 16 answerable questions with 0 answered.

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

Answer all Questions

Wherever appropriate suitable assumptions should be made by the candidate.

Working notes should form part of the answer.

Marks

The following are the summarized Balance Sheet of Star Ltd. as on 31st March, 2008 and 2009:

(Rs.‘000)
	2008	2009
Equity share capital of Rs.10 each Profit and Loss A/c Securities Premium 14% Debentures Long term borrowings Sundry Creditors Provision for Taxation Proposed Dividend	3,400 400 40 800 180 360 20 300	3,800 540 80 900 240 440 40 480
	5,500	6,520
Sundry Fixed Assets: Gross Block Less: Depreciation	3,200 640	4,000 1,440
Net Block Investment Inventories Sundry Debtors Cash and Bank Balance	2,560 1,200 1,000 640 100	2,560 1,400 1,400 900 260
	5,500	6,520

The Profit and Loss account for the year ended 31st March, 2009 disclosed:

	(Rs.‘000)
Profit before tax Less: Taxation Profit after tax Less: Proposed dividend	780 (160) 620 (480)
Retained Profit	140

The following information are also available:

(1)	40,000 equity shares issued at a premium of Re.1 per share.
(2)	The Company paid taxes of Rs.1,40,000 for the year 2008–09.
(3)	During the period, it discarded fixed assets costing Rs.4 lacs, (accumulated depreciation Rs.80,000) at Rs.40,000 only.

You are required to prepare a cash flow statement as per AS 3 (Revised), using indirect method.

(0)

(a)

A, B and C run a business sharing profits and losses in proportion of 2:2:1. On 1st January, 2008 their respective capitals were Rs.96,000, Rs.90,000 and Rs.84,000.

On 30th June, 2008 the following was the position:

	Rs.
Creditors Furniture Book debts Stock Cash in hand and at bank	30,000 9,000 1,80,000 90,000 36,000

The drawings of the partners respectively were Rs.12,000, Rs.9,000 and Rs.6,000 during the half–year. Each partner is entitled to an interest at the rate of 5% p.a. on capital. Interest on drawings was calculated as Rs.600 for A, Rs.450 in case of B and Rs.300 in case of C.

You are required to prepare:

(i)	A statement of affair as on 30^th June, 2008.
(ii)	Calculate the profits for the half–year ending on 30^th June, 2008 and allocate the same amongst the partners. Also calculate capital of each partner as on 30^th June, 2008.

(0)

(b)

The following is the Balance Sheet of X Ltd. as on 31st March, 2009:

Liabilities	Rs.	Assets	Rs.
12,000, 10% Preference shares of Rs.100 each 24,000, Equity shares of Rs.100 each 10% Debentures Bank overdraft Sundry Creditors	12,00,000 24,00,000 6,00,000 6,00,000 3,00,000	Goodwill Land & building Plant & machinery Stock Debtors Cash Profit & Loss Account Preliminary expenses	90,000 12,00,000 18,00,000 2,60,000 2,80,000 30,000 14,00,000 40,000
	51,00,000		51,00,000

On the above date, the company adopted the following scheme of reconstruction:

(i)	The equity shares are to be reduced to shares of Rs.40 each fully paid and the preference shares to be reduced to fully paid shares of Rs.75 each.
(ii)	The debentureholders took over stock and debtors in full satisfaction of their claims.
(iii)	The Land and Building to be appreciated by 30% and Plant and machinery to be depreciated by 30%.
(iv)	The fictitious and intangible assets are to be eliminated.
(v)	Expenses of reconstruction amounted to Rs.5,000.

Give journal entries incorporating the above scheme of reconstruction and prepare the reconstructed Balance Sheet.

(0)

(a)

Neo Ltd., with headquarters at Mumbai, maintains a branch at Goa . Goods are invoiced at cost plus 25%. In respect of Goa branch, the following information pertaining to the year ended 31st March, 2009 are made available to you:

	Rs.
Goods sent to Branch (at Invoice price) Goods returned by branch during the year (at Invoice price) Cash sales effected by branch Discount allowed to customers Amount received from branch debtors Cheques of customers which got dishonoured Branch expenses met in cash Sales return at Goa branch Bad debts	6,75,000 24,000 1,85,000 2,500 3,25,000 8,000 72,500 10,000 5,500

	On 31^st March, 2009	On 31^st March, 2008
Branch debtors Stock at branch (at Invoice price)	1,05,000 2,36,000	50,000 1,50,000

Adopting the Stock and debtors system, you are required to prepare the following Ledger accounts, as appearing in the books of the Head Office:

(i)	Goa branch debtors account;
(ii)	Goa branch adjustment account;
(iii)	Goa branch profit and loss account.

(0)

(b)

P, Q and R are partners sharing profits and losses as to 2:2:1. Their Balance Sheet as on 31st March, 2009 is as follows:

Liabilities

Rs.

Assets

Rs.

Capital accounts

P
Q
R

1,20,000
48,000
24,000

Reserve Fund
Creditors

1,92,000
60,000
48,000

Plant and Machinery
Fixtures
Stock
Sundry debtors
Cash

1,08,000
24,000
60,000
48,000
60,000

3,00,000

They decided to dissolve the business. The following are the amounts realized:

	Rs.
Plant and Machinery Fixtures Stock Sundry debtors	1,02,000 18,000 84,000 44,400

Creditors allowed a discount of 5% and realization expenses amounted to Rs.1,500.

There was an unrecorded asset of Rs.6,000 which was taken over by Q at Rs.4,800. A bill for Rs.4,200 due for sales tax was received during the course of realization and this was also paid.

You are required to prepare:

(i)	Realisation account.
(ii)	Partners’ capital accounts.
(iii)	Cash account.

(0)

(a)

‘X’ Ltd., issued 1,00,000 equity shares of Rs.10 each at par. The entire issue was underwritten as follows:

A – 60,000 shares (Firm underwriting 8,000 shares)
B – 30,000 shares (Firm underwriting 10,000 shares)
C – 10,000 shares (Firm underwriting 2,000 shares)

The total applications including firm underwriting were for 80,000 shares.
The marked applications were as follows:
A– 20,000 shares; B– 14,000 shares; C– 6,000 shares.
The underwriting contract provides that credit for unmarked applications be given to the underwriters in proportion to the shares underwritten. Determine the liability of each underwriter.

(0)

(b)

‘A’ Ltd is to be liquidated. Their summarised Balance Sheet as at 30th September, 2008 appears as under:

	Rs.
Liabilities: 5,00,000 equity shares of Rs.100 each Secured debentures (on Land and Buildings) Unsecured loans Trade creditors	50,00,000 20,00,000 40,00,000 70,00,000
	1,80,00,000
Assets: Land and buildings Other fixed assets Current assets Profit and loss account	10,00,000 40,00,000 90,00,000 40,00,000
	1,80,00,000
Contingent liabilities are: For bills discounted For excise duty demands	2,00,000 3,00,000

On investigation, it is found that the contingent liabilities are certain to devolve and that the assets are likely to be realised as follows:

	Rs.
Land and Building Other fixed assets Current assets	22,00,000 36,00,000 70,00,000

Taking the above into account, prepare the statement of affairs.

(0)

(a)

The following facts have been taken out from the records of Dee Bank Ltd. as on 31^st March, 2009:

	Dr. (Rs.)	Cr. (Rs.)
Rebate on bills discounted (not due on March 31st, 2008) Discount received Bills discounted	12,25,000	45,800 2,02,500

An analysis of the bills discounted is as follows:

	Amount	Due date	Rate of discount
	Rs.	2009
(i) (ii) (iii) (iv)	3,75,000 1,50,000 2,20,000 4,80,000	April 8 May 5 June 12 July 15	12% 14% 14% 15%

You are required to:—

(i)	Calculate rebate on bills discounted as on 31st March, 2009.
(ii)	The amount of discount to be credited to the profit and loss account.
(iii)	Show necessary journal entries in the books of Dee Bank Ltd. as on 31^st March, 2009.

(0)

(b)

On 31^st March, 2009 the books of Zee Insurance Company Limited, contained the following particulars in respect of fire insurance:

Particulars	Amount (Rs.)
Reserve for unexpired risks on March 31, 2008 Additional reserve for unexpired risks on March 31, 2008 Premiums Claims paid Estimated liability in respect of outstanding claims: On March 31, 2008 On March 31, 2009 Expenses of management (including Rs.30,000 legal expenses paid in connection with the claims) Interest and dividend Income tax on the above Profit on sale of investment Commission paid	5,00,000 1,00,000 11,20,000 6,40,000 65,000 90,000 2,80,000 64,250 6,520 11,000 1,52,000

On 31^st March, 2009 provide Rs.5,60,000 as unexpired risk reserve and Rs.75,000 as Additional reserve.

You are required to prepare the Fire Insurance Revenue account as per the regulations of IRDA, for the year ended 31^st March, 2009.

(0)

Answer any four of the following:

(a)

A Company entered into an agreement to sell its immovable property to another company for Rs.35 lakhs. The property was shown in the Balance Sheet at Rs.7 lakhs. The agreement to sell was concluded on 15^th February, 2009 and sale deed was registered on 30^th April, 2009.

You are required to state, with reasons, how this event would be dealt with in the financial statements for the year ended 31^st March, 2009.

(0)

(b)

‘A’ and ‘B’ are partners sharing Profits and Losses in the ratio of 3:1. Their capitals were Rs.3,00,000 and Rs.2,00,000 respectively. As from 1st April, 2009, it was agreed to change the profit sharing ratio to 3:2. According to the partnership deed, goodwill should be valued at two years’ purchase of the average of three years’ profits. The profits of the previous three years ending 31^st March were:

2007–Rs.1,50,000; 2008–Rs.2,00,000 and 2009–Rs.2,50,000. Pass the necessary journal entry to give effect to the above arrangement in the capital accounts of the partners.

(0)

(c)

Explain the structure of Government Accounts in India.

(0)

(d)

(i)

Explain the disclosure requirement for fixed assets as per AS 10.

(0)

(ii)

During the year 2008–09, P Limited incurred the following expenses on machinery:

Rs.2.50 lacs as routine repairs and Rs.75,000 on partial replacement of a part. Rs.7 lacs on replacement of part of a machinery which will improve the efficiency of the machine. Which amount should be capitalized as per AS 10?

(0)

(e)

Explain the use of accounting information in Agricultural Farm.

(0)

(f)

Goods of Rs.5,00,000 were destroyed due to flood in September, 2006. A claim was lodged with insurance company, but no entry was passed in the books for insurance claim.

In March, 2009, the claim was passed and the company received a payment of Rs.3,50,000 against the claim. Explain the treatment of such receipt in final accounts for the year ended 31^st March, 2009.

(0)

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