CA Clues Nikhil Gupta

Shree Guru Kripas Institute of Management

ACCOUNTING GROUP I
Reg. No..

Total Number of Printed Pages: 6 Date: 18.03.2015

Time Allowed: 3Hrs Maximum Marks: 100

Question 1 is compulsory (4 5 = 20 Marks). Answer any 5 from the remaining 6 (16 5 = 80 Marks)

1(a) Explain the levels of Noncorporate enterprises classified under As and As applicability. [5 Marks]

1(b) Can PT Ltd, a Wire Netting Company, while valuing its Finished Stock at the year end include interest
on Bank Overdraft as an element of cost, for the reason that Overdraft has been taken specifically for
the purpose of financing Current Assets like Inventory and for meeting day to day working expenses?
[5 Marks]
1(c) Notes on Accounts of a Company reads: No depreciation provided on a Machinery costing ` 50 Lakhs
imported three years back, since it is yet to be put into use. [5 Marks]
1(d) Nilakanta Construction Co. Ltd undertook a contract on 1st January to construct a building for ` 80
Lakhs. The Company found on 31st March that it had already spent ` 58,50,000 on the construction.
Prudent estimate of additional cost for completion was ` 31,50,000.
What amount should be charged to Revenue and what amount of Contract Value to be recognized as
Turnover in the accounts for the year ended 31st March as per provisions of AS7? [5 Marks]

2 The Balance Sheet of Amitabh, Abhisekh and Amrish as at 31.12.2013 stood as follows: [16 Marks]
Capital and Liabilities ` Properties and Assets `
Capital Accounts: NonCurrent Assets: Goodwill 37,800
Amitabh 60,000 Land & Buildings 74,000
Abhisekh 40,000 Investments 10,000
Amrish 40,000 1,40,000 Life Policy (at Surrender Value):

General Reserve 8,000 Amitabh 2,500

Investment Fluctuation Reserve 2,400 Abhisekh 2,500
Amrish 1,000
Current Liabilities: Current Assets:
Creditors 25,800 Stock 20,000
Debtors 20,000
Less: Provisions for Doubtful (1,600) 18,400
Debts
Cash & Bank Balances 10,000
Total 1,76,200 Total 1,76,200

Amrish died on 31st March 2013, due to this reason the following adjustments were agreed upon:
Land and Buildings be appreciated by 50%.
Investments be valued at 6% less than the cost.

1
 CA Clues Nikhil Gupta
Shree Guru
G Kripas Institute of Managemennt Accounts Group
G I CA
C IPCC

All Debtoors (except 20

0% which aree considered as a doubtful) were
w good.
Stock to be reduced too 94%.
Goodwill to be valued d at 1 years purchase
p of thhe average proofits of the paast five years.
Amrishss share of prrofit to the date
d of death be calculated on the bassis of average profits of the
t three
completeed years immeediately preceeding the yearr of death.

The profits of the last fivee years are as follows:

Year 2008 20009 2010 2011 20122 Total
T
Amount(`) 23,000 0 28,000 18,000 16,000 20,0000 1,005,000

The Life Poliicies have beeen shown at their

t Surrendeer Values, reppresenting 10% of the sum
m assured in each case.
The annual premium
p of ` 1,000 is payaable every yeaar on 1st Auguust.

Give the neccessary Journaal Entries in the

t books of account, andd prepare the Balance Sheeet of the recoonstituted
Firm.

3(a) Lalataksha Paapers Ltd forr the year ennding 31st

The following is the Profit annd Loss Accoount of the L
Marcch: [66 Marks]
Particularrs ` Partticulars `
To Admn. Selling & Fin
nance Expensses 5,75,8804 By Balaance b/d 4,12,632
To Nationaal Defence Fu
und 20,0000 By Balaance from Traading Accounnt 38,35,41
4
To Directoors Fees 54,7780 By Inteerest on Investments 10,964
To Interestt on Debenturres 21,3380 By Trannsfer Fee 537
To Managiing Directorss Remuneration 3,70,5500 By Proffit on Sale off Plant
To Depreciation of Fixeed Assets 4,69,7713 A
Amount realizzed 40,000
To Provisioon for Taxatio
on 11,40,0000 Less: Book
B Value (
(32,000) 8,000
To General Reserve 5,00,0000
To Debentuure Sinking Fund
F 4,8800
To Investm
ment Revaluattion Reserve 9,8800
To Balancee c/d 11,00,7770
Total 42,67,5547 T
Total 42,67,54
7
As an Auditoor you are req
quired to comm
ment on the Managerial
M Reemuneration.

3(b) Muruuga Ltd was incorporated

i on 1st Augusst. It had acquuired a runninng business from
fr Govindaa and Co.
with effect from 1st April. The Purchase Connsideration was
w ` 50,00,0000, of which ` 10,00,000 was w to be
paid in cash and ` 40,00,000 ini the form of
o fully paid Shares.
S Purchhase Considerration due to Vendors
was settled
s on 31sts August. [12 Marks]

The Company
C alsoo issued sharres for ` 40,,00,000 for cash.
c Machineery costing ` 25,00,000 was
w then
installled. Assets accquired from the Vendors were: Machinnery ` 30,00,000, Stock ` 6,00,000, andd Patents
` 4,000,000.

nded 31st Marrch, the Totaal Sales were ` 1,80,00,0000, the Sales per
Durinng the year en p month inn the first
half year
y being onee half of whatt they were inn the latter hallf year.

2
 CA Clues Nikhil Gupta
Shree Guru
G Kripas Institute of Managemennt Accounts Group
G I CA
C IPCC

The Net
N Profit of th
he Company, after charginng the followiing expenses, was ` 10,00,,000:
Particulars `
Depreciattion 5,40,000
Directorss Fees 86,000
Preliminaary Expenses 10,000
Office Ex
xpenses 2,40,000
Selling Ex
xpenses 1,98,000
Interest to
o Vendors 50,000

Asceertain the preincorporatioon and postiincorporationn Profits, and prepare the Balance Sheeet of the
mpany as on 31st March. The Closing Stoock was valueed at ` 7,00,0000.
Com

4(a) The Balance

B L as at 1st April
Sheeets of Nala Ltdd and Kalki Ltd, A were as following [122 Marks]
Liabilitiees Nala Kalki Asseets Nala Kalki
Shaare Capital: Fixed Assets (other than
F 5,00,000 3,50,000
G
Goodwill)
Equuity Shares off ` 10 6,00,000 4,00,000 StockinTradde 95,000 75,000
eachh
Resserves 1,50,000 1,00,000 Debtors
D 1,40,000 1,00,000
Profit and Loss Account
A 75,000 60,000 Cash
C and Bankk 1,17,500 60,000
Sunndry Creditorss 37,500 30,000 Preliminary
P Exxpenses 10,000 5,000
Total 8,62,500 5,90,000 Tottal 8,62,500 5,90,000
st
Nala Ltd took ov ver and absorrbed Kalki Ltd L as on 1 October. Noo Balance Sheet of Kalki Ltd was
prepaared on the daate of takeovver. But the following
fo infoormation is made
m availablee to you:
th
1. In
I the six mon nths ended 300 Septemberr, Kalki Ltd made m a Net Prrofit of ` 60,0000 after provviding for
d
depreciation at
a 10% per annnum on Fixeed Assets. Naala Ltd duringg that period had h made a NetN Profit
o ` 1,45,000 after providinng for deprecciation at 10%
of % per annum on o the Fixed Assets.
A
2. Both
B the Commpanies had diistributed divvidends of 10% % on 1st July.
3. Goodwill
G of Kalki
K Ltd on the date of taakeover was estimated
e at ` 25,000 and it was agreedd that the
S
Stock of Kalkki Ltd would be
b appreciatedd by ` 15,0000 on the date of o takeover.
4. Nala
N Ltd to issue shares to Shareholderss of Kalki Ltdd on the basis of the Intrinssic Value of SharesS on
t date of tak
the keover.

Draft L after absorption.

ft the Summarry Balance Shheet of Nala Ltd

4(b) Fromm the followin ng, prepare ann Account Cuurrent to be rendered by A to B at 31st December, reeckoning
intereest at 10% p.aa. [4 Marks]
D
Date Particulars ` Date Particulars `
Julyy 1 Balaance owing frrom B 600 Sept. 01 B accepted As
A Bill at 3 months
m date 250
Jul 17 Gooods sold to B 50 Sept. 1 Cash receiveed from B 350
Augg. 1 Cashh received froom B 650 Oct.22 Goods boughht from B 30
Augg.19 Gooods sold to B 700 Nov. 12 Goods sold to
t B 20
Augg.30 Gooods sold to B 40 Dec. 14 Cash receiveed from B 80

3
 CA Clues Nikhil Gupta
Shree Guru
G Kripas Institute of Managemennt Accounts Group
G I CA
C IPCC

5(a) A firre occurred in n the premisees of Fireprooof Co. on 31st August 20113. From the following paarticulars
relatiing to the perriod from 1st April
A 2013 to 31st August 2013,
2 you aree requested asscertain the ammount of
claim
m to be filed with
w the Insurrance Companny for the Losss of Stock. The
T concern had h taken an Insurance
I
Policcy for ` 60,0000, which is suubject to Aveerage Clause. [66 Marks]
Partticulars `
(i) Stock as per Balance Sheeet at 31.03.20013 99,000
(ii) Purchases 1,70,000
(iii)) Wages (inclu
uding Wages for the Installlation of a Machine
M ` 3,0000) 50,000
(iv)) Sales 2,42,000
(v) Sale Value of
o goods draw
wn by Partnerss 15,000
th
(vi)) Cost of good
ds sent to Connsignees on 166 August 20013, lying unssold with them
m 16,500
(vii) Cost of goods
g distribuuted as Free Samples
S 1,500
st
While vaaluing the Stoock at 31 March
M 2013, ` 1,000 weree written off in
i respect off a slow moviing item,
the cost of which was ` 5,000. A portion of theese goods weere sold at a looss of ` 500 on
o the originaal cost of
` 2,500. The remaindder of the stoock is now esstimated to bee worth the Original
O Costt. The value of goods
salvaged was estimateed at ` 20,0000. The Averagge Rate of Grooss Profit was 20% througghout.

5(b) What is the accountin ng entry to bee passed as peer AS10 for the
t followingg situations [4 Marks]
M
(i) Increaase in value of Fixed Assetts by ` 50,00,,000 on accouunt of Revaluaation.
(ii) Decreease in value of Fixed Asset by ` 30,000,000 on accouunt of Revaluuation.

5(c) Rudrra Ltd, an Inv

vestment Com mpany, is finaalizing its account for the Financial
F Yeaar ending Maarch 2013
in the month of August
A 2013. How will thee following inncomes to acccounted for in i the books of Rudra
Ltd? [66 Marks]
(1) X Ltd has decclared Interim
m Dividend which
w has not been receiveed till 31032013 but recceived on
2
25042013.
(2) Y Ltd has deeclared divideend on 8th May
M 2013 for the year endding 310322013, which has been
a
approved t Shareholdders of the Company on 300th June 2013.
by the
(3) Z Ltd, a Subssidiary of AQ
Q Ltd, has decclared dividennd for the yeaar ended 31032013 on 25 2 th May
2
2013, the AGM M for which is to be held on
o Septemberr 2013.

6 Chandru keeps his bo ooks under Single

S Entry System. On 1st April of a financial year,
y his Stateement of
Affairs sttood as follow
ws [166 Marks]
Capital and Liabilities
L ` Propertiess and Assets `
Capital Account 2,50,0000 NonC Current Assetss: Furniture annd 1,00,000
Fittingss
Currentt Liabilities: Currentt Assets: Stocck 6,10,000
Trade Credittors 5,80,0000 Tradde Debtors 1,48,000
Bills Payablee 1,25,0000 Billls Receivable 60,000
Outstanding Expenses 45,0000 Cash in Hand andd at Bank 80,000
Uneexpired Insuraance 2,000
Totaal 10,00,0000 T
Total 10,00,000

f the yeareended 31st Maarch:

The folloowing was thee summary off Cash Book for

4
 CA Clues Nikhil Gupta
Shree Guru
G Kripas Institute of Managemennt Accounts Group
G I CA
C IPCC

Recceipts ` P
Payments `
Cash in Hand & at Bank
B (Openingg 80,000 Payments
P to Trade
T Creditoors 7
75,07,000
Balancee)
Cash Saales 73,80,000 Payments
P forr Bills Payablee 8,15,000
Receiptts from Trade Debtors 15,10,000 Sundry
S Expennses paid 6,20,700
Receiptts for Bills Reeceivable 3,40,000 Drawings
D 2,40,000
Cash in Handd & at Bank (C
C Closing 1,27,300
B
Balance)
Total
T 93,10,000 Total 9
93,10,000

Discountt Allowed to Trade Debtorrs and receiveed from Tradde Creditors amounted
a to ` 36,000 and ` 28,000
respectivvely. Bills en
ndorsed amounnted to ` 15,0000. Annual Fire
F Insurance Premium ` 6,000 was paaid every
year on 1st August for the renewal of the policy. p Furrniture, Fixtuures and Fittiings were suubject to
Depreciaation at 15% p.a.
p on Diminnishing Balancce Method.
You are also
a informed d about the foollowing balannces as on 31st March (yeaar end).
Particu
ulars ` Partticulars `
Stock 6,50,0000 Bills Payablle 1,40,000
Trade Debto
ors 1,52,0000 Outstandingg Expenses 5,000
Bills Receivaable 75,0000

Chandru maintains a steady

s Gross Profit
P Ratio of
o 10% on Salles.

Prepare Trading
T and Profit
P 3 st March, annd Balance Shheet as at thatt date.
and Losss A/c for the yearended 31

7. Answer any
a four of th
he following [4 4 = 166 Marks]
(a) From thee following figures,
f prepaare the Generral Ledger Adjustment
A Acccount in thee Bought Leddger, and
Sales Leddger Adjustm
ment Account in the Generaal Ledger
Partticulars ` Particulars `
Balancee of Bought Ledger
L Adjt A/c
A at the 3,860 Innterest on Cusstomers overrdue 400
beginninng Cr. A
Accounts
Balancee of Sales Led
dger Adjt A/cc at the 2,750 Collection from
m Debtors 29,000
beginninng
Credit Purchases
P 40,000 Saales Returns 800
Acceptaances Receiveed from Custoomers 2,500 Credit Sales 50,000
Allowannces Received
d 400 Cash Sales 2,000
Credit transferred
t fro
om Bought Leedger to 75 Acceptances
A reeturned dishonnoured 700
Sales Leedger
Paaid to Creditoors 13,000

(b) The following amountts are due to Govind

G by Hiimavan. Himaavan wants too pay off (aa) on 18th Marrch or (b)
on 14th Juuly. Interest rate
r of 8% p.aa. is taken intoo consideratioon.
Due Daate 100th Jan 26th Jan (R
Republic Day)) 23rdr
Mar 18th Aug (S
Sunday)
` 5,000
5 100,000 300,000 40,0000
Determinne the amountt to be paid inn (a) and in (bb).

5
 CA Clues Nikhil Gupta
Shree Guru
G Kripas Institute of Managemennt Accounts Group
G I CA
C IPCC

(c) What do you mean by b Codificatiion of Accouunts? What are a its benefiits? Give an example
e of Codified

Accountss.
(d) Journalisse the follow wing issues of Debenturess in the bookks of the Isssuing Compaany (each situuation is
independdent)
(i) 25,0000 nos. of 8% % Debentures of ` 100 each,
e issued at
a a Premiumm of ` 15 perr Debenture, the total
amouunt is collecteed at the time of application itself.
(ii) Machhinery worth ` 38 Lakhs was w purchasedd. The amounnt due to the Vendor
V was settled
s by wayy of issue
of 6%% Debenturess of ` 400 eacch, issued at a discount of 5%.
5
(iii) 50,0000 nos. 9% Fully Convertiible Debenturres issued at face
f value of ` 50 each, thhe entire amouunt being
colleected at the tim
me of applicaation.

(e) Explain the

t conditionns involved inn an Amalgaamation in thhe nature of Merger and Amalgamatioon in the
nature off Purchase.