| 1. | Explain any four of the following : | 5each | |
| | (i) | Dual aspect concept | | (0) |
| | (ii) | Average due date | | (0) |
| | (iii) | Limitations of single entry system | | (0) |
| | (iv) | Advantages of department accounts | | (0) |
| | (v) | Operating lease. | | (0) |
| 2. | (a) | State, with reasons in brief, whether the following statements are true or false: | 2each | |
| | | (i) | Sub–division of journal has made the ‘journal proper’ useless. | | (0) |
| | | (ii) | The provision for discount on debtors is calculated before deducting the provision for doubtful debts from debtors. | | (0) |
| | | (iii) | Amount paid for acquisition of goodwill is a deferred revenue expenditure. | | (0) |
| | | (iv) | Receipts and payments account is a summary of all capital receipts and capital payments. | | (0) |
| | (b) | Distinguish between the following : | 4each | |
| | | (i) | ‘Accrual basis of accounting’ and ‘cash basis of accounting’. | | (0) |
| | | (ii) | ‘Consignment’ and ‘joint venture’. | | (0) |
| 3. | (a) | On 31st March, 2003, Manish received a bank statement which showed a credit balance of Rs.14,000. An examination of the cash book and bank statement revealed the following : | (i) | Cheques for Rs.11,400 deposited with the bank for collection were credited by the bank on 3rd April, 2003. | | (ii) | Cheques issued, but not presented for payment upto 31st March, 2003 totalled Rs.37,600. | | (iii) | A payment by cheque for Rs.1,600 has been entered twice in the cash book. | | (iv) | On 30th March, 2003, the bank credited Rs.20,000 to Manish by mistake. | | (v) | The bank collected interest on securities amounting to Rs.17,400, but the advice was received by Manish on 3rd April, 2003. | | (vi) | A bill of exchange for Rs.10,000 was discounted by Manish with the bank. The bill was dishonoured on the due date, but no entry had been made in the cash book till 31st March, 2003. | | (vii) | Bank charges amounting to Rs.580 had not been entered in the cash book. | | Prepare a bank reconciliation statement |
| 8 | (0) |
| | (b) | The trial balance of Hari did not agree. He put the difference to a newly opened suspense account. Later on, he located the following errors: | (i) | A credit sale of Rs.2,000 to Urvashi and Co. was credited to their account. | | (ii) | A credit purchase for Rs.6,710 from Supreme Industries had been posted to their debit as Rs.6,170. | | (iii) | The returns inward book had been cast Rs.1,000 short. | | (iv) | A credit sale of Rs.10,000 had been passed through the purchases day book. The customer’s account had, however, been correctly debited. | | (v) | Rs.3,750 paid as wages for the erection of a new machine had been charged to wages account. | | Pass journal entries to rectify the above errors and prepare the suspense account. |
| 8 | (0) |
| 4. | The following is the receipts and payments account of Amar Jyoti Charitable Hospital for the year ended 31st March, 2003 : | Receipts | Rs. | Payments | Rs. | To Balance b/d
To Subscriptions
To Donations
To Interest on investments at
7% per annum for the year
Charity show Collections | 1,40,000
10,00,000
2,90,000
1,40,000
2,00,000 | By Payment for Medicines
By Honorarium to doctor
By Salaries
By Sundry expenses
By Equipment purchased
By Charity show expenses
By Balance c/f | 6,00,000
2,00,000
5,50,000
10,000
3,00,000
20,000
90,000 | | 17,70,000 | | 17,70,000 |
Additional information: | On 1.4.2002
(Rs.) | On 31.3.2003
(Rs.) | Subscriptions due
Subscriptions received in advance
Stock of medicines
Creditors for medicines
Equipments
Buildings | 10,000
20,000
2,00,000
1,60,000
4,20,000
8,00,000 | 20,000
10,000
3,00,000
2,40,000
6,00,000
7,60,000 |
You are required to prepare income and expenditure account for the year ended 31st March, 2003 and balance sheet as at that date | 16 | (0) |
|
| 5. | (a) | Explain with example ‘first–in–first–out’ (FIFO) method of stock valuation. | 4 | (0) |
| | (b) | A firm, which depreciates its machinery at 10% per annum on written down value method, had on 1st April, 2002 Rs. 9,72,000 in the debit of machinery account. During the year ended 31st March, 2003, a part of the machinery purchased on 1st April, 2000 for Rs.80,000 was sold for Rs.45,000 on 1st October, 2002 and a new machinery at a cost of Rs.1,50,000 was purchased and installed on the same date, installation charges being Rs.8,000. On 31st March, 2003, the firm decided to change its method of charging depreciation from written down value method to 1ststraight line method with effect from April, 2000, the rate of depreciation remaining the same as before.
Show machinery account for the year ending 31st March, 2003 after incorporating the effect of the above mentioned transactions. | 12 | (0) |
| 6. | A firm has two departments —(i) Cloth Department; and (ii) Readymade Clothes Department. The readymade clothes are made by the firm itself out of the cloth supplied by the Cloth Department at its usual selling price. From the following figures, prepare departmental trading and profit and loss account for the year ended 31st March, 2003 : | Particulars | Cloth
Department
Rs. | Readymade Clothes
Department
Rs. | Opening stock
Purchases
Sales
Transfer to Readymade Clothes Department
Manufacturing expenses
Selling expenses
Closing stock | 2,40,000
18,00,000
20,00,000
4,00,000
—
40,000
3,00,000 | 48,000
24,000
6,00,000
—
68,000
4,000
60,000 |
The stock in Readymade Clothes Department may be considered as consisting of 80% cloth and rest as other expenses. The Cloth Department earned a gross profit of 25% in 2001–02. | 16 | (0) |
| 7. | (a) | Neeraj sold goods to Dhiraj for Rs.4,000 on 1st May, 2003. On the same day, he drew on Dhiraj a bill for the amount for 3 months which Dhiraj duly accepted. Neeraj got the bill discounted with his bank for Rs.3,900. Just before the due date, on 2nd August, 2003 Dhiraj became insolvent. Later, his estate could pay only 40% of the amount due. Pass journal entries in the books of Neeraj. | 6 | (0) |
| | (b) | On 1st April, 2003, a company took an insurance policy for Rs.9,00,000 in respect of goods stored in its godowns. On 23rd August, 2003, there was a loss of goods due to fire. Goods salvaged were valued at Rs.29,000. Find out the amount of the claim for loss of goods taking into account the following information also : | (i) | The company has a policy of selling goods at a price to give a gross profit margin of 25% of the cost. | | (ii) | The company values its stock at cost price or market price whichever is lower. On 31st March, 2003, the closing stock was valued at Rs.8,56,000 which included damageed goods costing Rs.20,000 valued at Rs.16,000. | | (iii) | Purchases from 1st April, 2003 till the date of fire amounted to Rs.22,00,000; during the same period sales amounting to Rs.25,09,600 were made which included the sale of 60% of the damageed goods at book value. | | The policy contains ‘average clause’. |
| 10 | (0) |
| 8. | (a) | X,Y and Z decide to dissolve their partnership firm on 31st March, 2003 when their balance sheet stands as under : Liabilities
Creditors
Capital accounts:
X Rs. 1,20,000
Y Rs. 90, 000
Z Rs. 60, 000 | Rs.
34,000
2,70,000 | | Assets
Cash at bank
Debtors
Stock
Tools
Motor car
Furniture
Machinery | Rs.
25,000
62,000
37,000
8,000
12,000
60,000
1,00,000 | | 3,04,000 | | | 3,04,000 |
Y and Z agree to form a new partnership to carry on the business and it is agreed that they will acquire from the old firm the following assets at amounts shown against them : | Rs. | Stock
Tools
Motor car
Furniture
Machinery
Goodwill | 40,000
5,000
25,000
78,000
84,000
60,000 |
The partnership agreement of X, Y and Z provides that trading profits or losses will be divided among X, Y and Z in the ratio of 3:2:1 respectively and that capital profits or losses will be divided in proportion of their capitals. Debtors realise Rs.59,000 and discount amounting to Rs.720 are secured on payments due to creditors. Prepare the necessary accounts of X, Y and Z giving effect to these transactions and also prepare the opening balance sheet of Y and Z who bring the necessary cash in the ratio of 3:2 respectively to pay to X. | 16 | (0) |
