CS Inter :: Company accounts and Cost & Management accounts : June 2006

The life assurance fund of Super Life Assurance Company had a balance of Rs.3.80 crore on 31st March, 2005. The actuarial valuation carried out on the same date revealed a net liability of Rs.2.60 crore. During the previous three years, an interim bonus of Rs.30 lakh was paid to the policyholders.

The company now proposes to carry forward Rs.50 lakh, the balance being divided between the policyholders and shareholders as per the applicable statutory provisions.
You are required to show the following :

(i)	Valuation balance sheet;
(ii)	Net profit for the three-year period; and
(iii)	Distribution of profit.

Following is the balance sheet of Danny Ltd. as on 31st March, 2005 :

Liabilities	(Rs.’000)
Issued and paid-up capital :	3,00,000
Equity shares of Rs.10 each	3,000
General reserve	100
Securities premium	5
10% Debentures	1,400
Sundry creditors	1,560
	6,065
Assets	(Rs.'000)
Land and building	630
Plant and machinery	2,350
Furniture and fittings	350
Investments	370
Stock	1,200
Sundry debtors	590
Cash and bank balance	575
	6,065

Journalise the following transactions :

(i)	Issue at 10% discount, 3,000, 9% debentures of Rs.100 each, redeemable at par.
(ii)	Issue at 10% premium, 4,000, 10% debentures of Rs.100 each, redeemable at par.
(iii)	Issue at par, 2,000, 8% debentures of Rs.100 each, redeemable at premium of 5%.
(iv)	Issue at 10% discount, 2,000, 9% debentures of Rs.100 each, redeemable at premium of 5%. Also give journal entry in case of (iv) above at the time of redemption of debentures. (Note: Narrations need not be given).

Following is the balance sheet of Danny Ltd. as on 31st March, 2005 :

Liabilities	(Rs.’000)
3,000, 6% Preference shares of Rs.100 each, fully paid-up	3,00,000
1,30,000 Equity shares of Rs.10 each,fully paid-up	13,00,000
Profit and loss account	9,00,000
8% Debentures	6,00,000
Sundry creditors	4,78,500
	35,78,500
Assets	(Rs.' 000)
Goodwill	1,00,000
Free-hold property	7,50,000
Plant and machinery less depreciation	7,00,000
Stock	7,40,000
Debtors (net)	7,98,500
Cash and bank balances	4,90,000
	35,78,500

Abrol Ltd. offered to the public 5,000, 9% mortgage debentures of Rs.100 each at Rs.105 and 80% of the issue was underwritten by Smart Bulls for maximum commission allowed by law. Applications were received from public for 4,000 debentures which were allotted. Show the balance sheet of the company.

Jai Ltd. acquired 15,000 shares in Hind Ltd., for Rs.1,55,000 on 1st July, 2004. The balance sheet of the two companies as on 31st March, 2005 were as follows:

Liabilities	Jai Ltd. Rs.	Hind Ltd. Rs.
Equity shares of Rs.10 each, fully paid-up	9,00,000	2,50,000
General reserves	1,60,000	40,000
Profit and loss account	80,000	25,000
Bills payable	40,000	20,000
Creditors	50,000	30,000
	12,30,000	3,65,000
Assets
Machinery	7,00,000	1,50,000
Furniture	1,00,000	70,000
Investments	1,55,000	—
Stock	1,00,000	50,000
Debtors	60,000	35,000
Cash at bank	90,000	40,000
Bills receivable	25,000	20,000
	12,30,000	3,65,000

Attempt any four of the following:

The following details are available from the books of Ruby Engineering Works Ltd. for the year ended 31st March, 2005 :

Monthly demand (Units)	2,000
Cost of placing an order (Rs.)	200
Annual carrying cost (Rs. Per Unit)	30
Normal usage (Units Per Month)	100
Maximum usage (Units Per Month)	150
Minimum usage (Units Per Month)	50
Re-order period (Weeks)	4 – 6
Based on the above details, calculate —
—Re-order quantity; — Re-order level; — Minimum level; and — Maximum level.
Assume 52 weeks in a year.

The cost of a product at capacity level of 5,000 units is given under ‘A’ below. For a variation in capacity above or below this level, the individual expenses vary as indicated under ‘B’ below :

Particulars	‘A’ (Rs.)	‘B’
Material costs	2,50,000	100% varying
Labour costs	1,50,000	100% varying
Power	12,500	80% varying
Repairs and maintenance	20,000	75% varying
Stores	10,000	100% varying
Inspection	5,000	20% varying
Depreciation	1,00,000	100% fixed
Administrative overheads	50,000	25% varying
Selling overheads	30,000	50% varying

Mention any four centres (except investment centre) classified under responsibility accounting. Explain investment centre in detail.

A firm had Rs.2,00,000 as cash at bank on 1st April, 2004. The consumer price index on that datewas 200. During the year ended 31st March, 2005, the receipts and payments were as stated below :

Ascertain the profit or loss on account of price changes. The year end index was 240.

Production report shows following results :
Units completed 1,40,000
Units in process on 31st July, 2005
(All materials used; 33 % completedfor labour and overheads)

	Rs.
Cost records :	60,000
Work-in-process as on 30th June, 2005 :
Material Labour Overheads 12,000 2,000 2,000	16,000
Cost of materials used during the month	51,200
Cost of labour for the month	30,000
Cost of overheads during the month	30,000
Total cost to be accounted for	1,27,200

Presuming that average method of inventory costing is used, prepare —

(i) (ii) (iii) (iv)

Statement of equivalent production. Statement showing cost for each element. Statement of apportionment of cost. Process account for process ‘Q’.

The audited profit and loss account of Rex Ltd. for the year ended 31st March, 2005 stood as under :

Dr.	Rs.		Cr.	Rs.
To Opening stock	10,10,000		By Sales	14,20,000
To Purchases	3,50,000		By Closing stock	3,60,000
To Direct wages	1,60,000
To Factory overheads	90,000
To Gross profit c/d	1,70,000
	17,80,000			17,80,000

The following information is available from the books of Exclusive Ltd. for the year ended 31st March, 2005: