CA PE - II :: Accounting : November 2002


Roll No…………………
Total No. of Questions— 6] [Total No. of Printed Pages—7

Time Allowed : 3 Hours Maximum Marks : 100
NSW
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
1. The following is the Balance Sheet of Sri Agni Dev as on 31st March, 2001:20
LiabilitiesRs.AssetsRs.
Capital account
Sundry Creditors for purchases		2,52,500
45,000		Machinery
Furniture
Stock
Debtors
Cash in Hand
Cash at Bank		1,20,000
20,000
33,000
1,00,000
8,000
16,500
2,97,5002,97,500

Riots occurred and fire broke out on the evening of 31st March, 2002, destroying the books of account and Furniture. The cashier was grievously hurt and the cash available in the cash box was stolen.

The trader gives you the following information:
(i)

Sales are affected as 25% for cash and the balance on credit. His total sales for the year ended 31st March, 2002 were 20% higher than the previous year. All the sales and purchases of goods were evenly spread throughout the year (as also in the last year).

NSW P.T.O.


( 2 )

NSW Marks
(ii)Terms of credit
Debtors
Creditors		2 Months
1 Month
(iii)Stock level was maintained at Rs. 33,000 all throughout the year.
(iv)A steady Gross Profit rate of 25% on the turnover was maintained throughout. Creditors are paid by cheque only, except for cash purchase of Rs. 50,000
(v)His private records and the Bank Pass-Book disclosed the following transaction for the year.
(i)Miscellaneous Business expenses Rs. 1,57,500 (including Rs. 5,000 paid by cheque and Rs. 7,500 was outstanding as on 31st March, 2002.
(ii)Addition to Machinery Rs. 60,000 (paid by cheque)
(iii)Private drawings Rs. 30,000 (paid by cash)
(iv)Travelling expenses Rs. 18,000 (paid by cash)
(v)Introduction of Additional Capital by depositing in to the bank Rs. 5,000 (paid by cash)
(vi)Depreciation on Machinery is to be provided @15% on the Closing Book value
(vii)The cash stolen is to be charged to the Profit and Loss Account
5
Prepare Trading, Profit and Loss Account for the year ended 31st March, 2002 and a Balance Sheet as on that date. Make appropriate assumptions wherever necessary. All workings should form part of your answer.
NSW Contind...

( 3 )

PD Marks
2.From the following information as on 31st March, 2002, prepare the Revenue Accounts of Sagar Bhima co. Ltd. engaged in Marine Insurance Business:16
ParticularsDirect Business
(Rs.)		Re-insurance
(Rs.)
I.Premium:
Received24,00,0003,60,000
Receivable - 1st April1,20,00021,000
- 31st March1,80,00028,000
Premium paid2,40,000---
Payable - 1st April---20,000
- 31st March---42,000
II.Claims:
Paid16,50,0001,25,000
Payable - 1st April95,00013,000
- 31st March1,75,00022,000
Received--1,00,000
Receivable - 1st April---9,000
- 31st March---12,000
III.Commission:
On Insurance accepted1,50,00011,000
On Insurance ceded---14,000
Other expenses and income:

Salaries - Rs.2,60,000 ; Rent, Rates and Taxes - Rs.18,000; Printing and Stationery - Rs. 23,000; Indian Income Tax paid - Rs. 2,40,000; Interest, Dividend and Rent received (net) - Rs. 1,15,500; Income Tax deducted at source - Rs. 24,500; Legal Expenses (Inclusive of Rs.20,000 in connection with the settlement of claims) - Rs.60,000; Bad Debts - Rs. 5,000; Double Income Tax refund - Rs. 12,000; Profit on Sale of Motor car Rs. 5,000.

Balance of fund on 1st April was Rs. 26,50,000 including Additional Reserve of Rs. 3,25,000. Additional Reserve has to be maintained at 5% of the net premium of the year.
3.The financial position of two companies Hari Ltd. and Vayu Ltd. as on 31st March, 2002 was as under:16
AssetsHari Ltd. (Rs.)Vayu Ltd.(Rs.)
Goodwill50,00025,000
Buildings3,00,0001,00,000
Machinery5,00,0001,50,000
Stock2,50,0001,75,000
Debtors2,00,0001,00,000
Cash at Bank50,00020,000
Preliminary Expenses30,00010,000
13,80,0005,80,000
NSW P.T.O.

( 4 )

NSW Marks
LiabilitiesHari Ltd.
(Rs.)		Vayu Ltd.
(Rs.)
Share Capital:
Equity Shares of Rs. 10 each10,00,0003,00,000
9% Preference Shares of Rs. 100 each1,00,000--
10% Preference Shares of Rs. 100 each--1,00,000
General Reserve1,00,00080,000
Retirement Gratuity fund50,00020,000
Sundry Creditors1,30,00080,000
13,80,0005,80,000
Hari Ltd. absorbs Vayu Ltd. on the following terms:
(a)10% Preference Shareholders are to be paid at 10% premium by issue of 9% Preference shares of Hari Ltd.
(b)Goodwill of Vayu Ltd. is valued at Rs. 50,000, Buildings are valued at Rs. 1,50,000 and the Machinery at Rs. 1,60,000
(c)Stock to be taken over at 10% less value and Reserve on Bad and Doubtful Debts to be created @ 7.5%
(d)Equity Shareholders of Vayu Ltd. will be issued Equity Shares @ 5% premium
Prepare necessary Ledger Accounts to close the books of Vayu Ltd. and show the acquisition entries in the books of Hari Ltd. Also draft the Balance Sheet after absorption as at 31st March, 2002.
4.Avinash, Rohit and Madwesh were carrying on business in partnership sharing Profits and Losses in the ratio of 5 : 4 : 3 respectively. The Trial Balance of the firm as on 31st March, 2002 was the following:
ParticularsDr. (Rs.)Cr.(Rs.)
Plant and Machinery @ Cost1,05,000--
Stock60,200--
Sundry Debtors85,000--
Sundry Creditors--1,05,200
Capital A/cs:
Avinash--70,000
Rohit--50,000
Madwesh--30,000
Drawings A/cs:
Avinash30,000--
Rohit25,000--
Madwesh20,000--
Depreciation on Plant and Machinery--35,000
Trading Profit for the year--1,29,800
Cash at Bank94,800--
4,20,0004,20,000
NSW Contind...


( 5 )

NSW Marks
Additional Information :
(a)

Interest on Capital Accounts at 10% on the amount standing to he credit of partners' Capital Accounts at the beginning of the year was not provided before preparing the above Trial Balance.
(b)

On 31st March, 2002 they formed a Private Ltd. Company Anagha (P) Ltd. to take over the partnership business.
(c)You are further informed as under:
(i)Plant and Machinery is to be transferred at Rs. 80,000
(ii)

Equity Shares of Rs. 10 each of the company are to be issued to the partners at par in such numbers to ensure that by reason of their share holdings alone. They will have the same rights of sharing Profits and Losses as they had in the partnership. Balance if any in their Capital Accounts will be settled by giving 7 1/2% Preference Shares at par.

(iii)Before transferring the business, the partners withdrew by cash from partnership the following amounts over and above the drawings as shown in the Trial Balance:
(a) Avinash Rs.20,000
(b) Rohit Rs.10,600
(c) Madwesh Rs.14,200
(iv)

All Assets and Liabilities except Plant and Machinery and the Bank Balance are to be transferred at their value in the books of the partnership as at 31st March, 2002.

(v)You are required to prepare:
(a)

Profit and Loss Adjustment Account for the year ending 31st March, 2002.

(b)

Capital Accounts showing all the adjustments required to dissolve the partnership

(c)

A statement showing the number of shares of each class to be issued by the company to each of the partners to settle their accounts.

(d)

Prepare Balance Sheet of the company Anagha (P) Ltd. as on 31.03.2002 after take over of the business.

NSW P.T.O.

( 6 )

NSW Marks
5.From the following details relating to the Accounts of Grow More Ltd. prepare Cash Flow statement16
Liabilities31.3.2002 (Rs.)31.3.2001 (Rs.)
Share Capital10,00,0008,00,000
Reserve2,00,0001,50,000
Profit and Loss account1,00,00060,000
Debentures2,00,000—
Provisions for taxation1,00,00070,000
Proposed dividend2,00,0001,00,000
Sundry Creditors7,00,0008,20,000
25,00,00020,00,000
Assets
Plant and Machinery7,00,0005,00,000
Land/Building6,00,0004,00,000
Investments1,00,000—
Sundry Debtors5,00,0007,00,000
Stock4,00,0002,00,000
Cash on hand/Bank2,00,0002,00,000
25,00,00020,00,000
(i)Depreciation @25% was charged on the opening value of Plant and Machinery.
(ii)During the year one old machine costing 50,000 (WDV 20,000) was sold for Rs. 35,000
(iii)Rs. 50,000 was paid towards Income tax during the year.
(iv)Building under construction was not subject to any depreciation
Prepare Cash flow Statement.
6.Attempt any four of the following questions:4x4=16
(a)When Capitalisation of borrowing cost should cease as per Accounting Standard 16?
NSW Contind...

( 7 )

NSW Marks
(b)Define a "Business Segment' and a "Geographical Segment" as per Accounting Standard 17.
(c)Briefly describe, how do you calculate "Diluted earnings per share" as per Accounting Standard 20.
(d)

Briefly describe the disclosure requirements for "Deferred Tax Assets" and "Deferred Tax Liabilities" as per Accounting Standard 22.
(e)Write short note on Sale and Lease Back Transactions as per accounting Standard 19.
(f)Explain percentage of completion method in respect of Construction Contracts as per Accounting Standard 7.
NSW

 

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