| 1. | X and Y are partners sharing profits and losses in the ratio of 3 : 2. On 30th september, 2006 they admitted Z as a partner. The new profit sharing ratio agreed was 2 : 2: 1.
At the time of admission Z brought in a fixture valued at Rs. 6,000 and a machinery worth Rs.24,000. No accounting entry was passed for the fixture brought in by partner Z in the books of the firm.
Also at the time of admission the valuation of goodwill was made. The value of goodwill of X and Y was decided at Rs. 40,000 and value of goodwill of partner Z was fixed at Rs. 20,000. No effect was given to the goodwill value in the books of the firm.
On 31.3.2007, it was decided that partner X would retire and the other partners viz., Y and Z would continue the business of the firm by converting it into a company called YZ Ltd., with equal shareholding in the company.
The partners agreed as below : | (i) | The goodwill of the firm shall be fixed at Rs.80,000. Necessary effect for goodwill value not recorded earlier shall be given. The present goodwill value being Rs.80,000 shall be reflected in the books of the company. | | (ii) | All the assets and liabilities of the firm shall be taken over by the company. | | (iii) | Partner X would take motor car of the firm at a value of Rs.7,400. | | (iv) | A plant owned by the firm is sold for Rs.6,000. | | (v) | The profit of the firm upto 30.9.2006 was Rs.44,000. | | (vi) | Partner X agreed to leave Rs.90,000 as loan with the firm in return for 12% interest per annum. |
Following is the Trial Balance of the firm as on 31.3.2007 : | Paritculars | DR
Rs. | CR
Rs. | | Capital Account : | X
Y
Z | —
—
— | 80,000
50,000
24,000 | | Drawings Account : | X
Y
Z | 22,000
20,000
9,600 | —
—
— | | Sundry Debtros | 70,000 | — | | Sundry Creditors | — | 32,000 | | Plant (Book value of plant sold Rs. 8,000) | 46,000 | — | | Fixtures | 14,000 | — | | Stock | 24,000 | — | | Motor Car | 5,400 | — | | Cash at Bank | 34,600 | — | | Profit and loss A/c(for the year) | — | 59,600 | | 2,45,000 | 2,45,00 |
You are required to prepare | (i) | Goodwill Adjustment Account | | (ii) | Profit and Loss Appropriation Account | | (iii) | Partner’s Capital Accounts | | (iv) | Balance sheet of YZ ltd after conversion |
| 20 | (0) |
| 2. | Following is the Balance Sheet of ABC Ltd. as at 31st March : | Liabilities | Rs. | Assets | Rs. | Share Capital
2,00,000 Equity shares of
Rs 10 each fully paid up
6,000 8% Preference shares
of Rs. 100 each
9% Debentures
Bank overdraft
Sundry Creditors
|
20,00,000
6,00,000
12,00,000
1,50,000
5,92,000
45,42,000 | Plant and machinery
Furniture and fixtures
Patents and copyrights
Investments (at cost)
(Market value Rs. 55,000)
Stock
Sundry debtors
Cash and bank balance
Profit and Loss A/c | 9,00,000
2,50,000
70,000
68,000
14,00,000
14,39,000
10,000
4,05,000
45,42,000 |
The following scheme of reconstruction was finalised: | (i) | Preference shareholders would give up 30% of their capital in exchange for allotment of 11% Debentures to them. | | (ii) | Debenture holders having charge on plant and machinery would accept plant and machinery in full settlement of their dues. | | (iii) | Stock equal to Rs. 5,00,000 in book value will be taken over by sundry creditors in full settlement of their dues. | | iv) | Investment value to be reduced to market price | | (v) | The company would issue 11% Debentures for Rs.3,00,000 and augment its workingcapital requirement after settlement of bank overdraft.
Pass necessary Journal Entries in the books of the company. Prepare Capital Reductionaccount and Balance Sheet of the company after internal reconstruction. |
| 16 | (0) |
| 3. | J Ltd. presents you the following information for the year ended 31st March, 2007: | | (Rs. in lacs) | | (i) | Net Profit before tax provision | 36,000 | | (ii) | Dividend paid | 10,202 | | (iii) | Income – tax paid | 5,100 | | (iv) | Book value of assets sold
Loss on sale of asset | 222
48 | | (v) | Depreciation debited in P & L account | 24,000 | | (vi) | Capital grant received – amortized in P & L A/c | 10 | | (vii) | Book value of investment sold
Profit on sale of investment | 33,318
120 | | (viii) | Interst income from investment credited in P & L A/c | 3,000 | | (ix) | Interest expenditure debited in P & L A/c | 12,000 | | (x) | Interest actually paid (Financing activity) | 13,042 | | (xi) | Increase in working capital
[Excluding cash and bank balance] | 67,290 | | (xii) | Purchase of fixed assets | 22,092 | | (xiii) | Expenditure on construction work | 41,688 | | (xiv) | Grant received for capital projects | 18 | | (xv) | Long term borrowings from banks | 55,866 | | (xvi) | Prvoision for income–tax debited in P & L A/c
Cash and bank balance on 31.3.2007 | 6,000
6,000
8,000 | | You are required to prepare a cash flow statement as per AS 3 (Revised). |
| 16 | (0) |
| 4. | (a) | Beta Ltd. having head office at Mumbai has a branch at Nagpur. The head office does wholesale trade only at cost plus 80%. The goods are sent to branch at the wholesale price viz., cost plus 80%. The branch at Nagpur is wholly engaged in retail trade and the goods are sold at cost to H.O. plus 100%.
Following details are furnished for the year ended 31st March, 2007: | Head Office
(Rs.) | Branch
(Rs.) |
Opening stock (as on 1.4.2006)
Purchases
Goods sent to branch (Cost to H.O. plus 80%)
Sales
Office expenses
selling expenses
Staff salary |
2,25,000
25,50,000
9,54,000
27,81,000
90,000
72,000
65,000 |
—
—
—
9,50,000
8,500
6,300
12,000 |
You are required to prepare Trading and Profit and Loss Account of the head office and branch for the year ended 31st March, 2007. | 8 | (0) |
| | (b) | The following information is available in the books of X Bank Limited as on 31st March, 2007: | Rs. | Bills discounted
Rebate on Bills discounted (as on 1.4.2006)
Discount received | 1,37,05,000
2,21,600
10,56,650 |
Details of bills discounted are as follows: Value of bill
(Rs). | Due date | Rate of Discount | | 18,25,000 | 5.6.2007 | 12% | | 50,00,000 | 12.6.2007 | 12% | | 28,20,000 | 25.6.2007 | 14% | | 40,60,000 | 6.7.2007 | 16% |
Calculate the rebate on bills discounted as on 31.3.2007 and give necessary journal entries. | 8 | (0) |
|
| 5. | Answer any eight of the following: | 8x2=16 | (0) |
| | (i) | A, B, and C are partners sharing profits and losses in the ratio of 3:2:1. B retired from the firm. Partners A and C decided to take his share in 3:1 ratio. What is the new ratio of the partners A and C? | | (0) |
| | (ii) | A company lodged a claim to insurance company for Rs. 5,00,000 in September, 2006. The claim was settled in February, 2007 for Rs. 3,50,000. How will you record the short fall in claim settlement in the books of the company. | | (0) |
| | (iii) | X Ltd. acquired a fixed asset for Rs. 50,00,000. The estimated useful life of the asset is 5 years. The salvage value after useful life was estimated at Rs.5,00,000. The State Government gave a grant of Rs.10,00,000 to encourage the asset acquisition. At the end of the second year, the subsidy of the State Government became refundable. What is the fixed asset value after refund of grant/subsidy to the State Government but before amortising the asset value at the end of the second year? | | (0) |
| | (iv) | What is meant by ‘Red–Ink interest’ in an Account Current? | | (0) |
| | (v) | What do you understand by the term ‘Firm Underwriting’? | | (0) |
| | (vi) | The closing capital of Mr. A on 31.3.2007 was Rs. 1,50,000. On 1.4.2006 his capital was Rs. 60,000. During the year he had drawn Rs. 40,000 for domestic expenses. He introduced Rs. 25,000 as additional capital in February, 2007. Find out his net profit for the year. | | (0) |
| | (vii) | What is the percentage of NPA provision to be made by banks in respect of fully secured doubtful advances of more than 3 years old? | | (0) |
| | (viii) | A concern made a net profit of Rs. 2,00,000 for the year ended 31.3.2007. The normal rate of return in that type of business is 20%. What is the value of business under “Profit Capitalisation method”? | | (0) |
| | (ix) | What are the two main methods of accounting for amalgamation of companies? | | (0) |
| | (x) | What is meant by accounting estimate? Give two examples for accounting estimate. | | (0) |
| 6. | Answer any four out of the following: | 4x4=16 | |
| | (a) | Mention six areas in which different accounting policies are followed by companies. | | (0) |
| | (b) | What are the advantages of outsourcing the accounting functions? | | (0) |
| | (c) | A company purchased its own 11% debentures in the open market for Rs. 50,00,000 (cum–interest). The interest amount included in the purchase price is Rs. 1,50,000. The face value of the debentures purchased is Rs. 52,00,000. The company cancelled the debentures so purchased.
Pass Journal Entries in the books of the company for purchase and immediate cancellation of debentures. | | (0) |
| | (d) | What are the advantages of self–balancing ledger system? | | (0) |
| | (e) | List the criteria to be applied for rating an enterprise as Level–I enterprise for the purpose of compliance of Accounting Standards in India. | | (1) |
| | (f) | From the following information relating to Y Ltd. Calculate Earnings Per Share (EPS): | Rs. in crores | Profit before V.R.S payments but after depreciation
Depreciation
VRS payments
Provision for taxation
Fringe benefit tax
Paid up share capital (Shares of Rs. 10 each fully paid) | 75.00
10.00
32.10
10.00
5.00
93.00 |
| | (0) |
