DCP 2018 Practice Question 7-13

DCP 2018
Financial Accounting
Practice Questions 7-20
[ Questions 1-6 are on Cash flows which are excluded from Final Examination as this topic
has been exhaustively discussed in Assignment 4 and test has been conducted in
Examination condition]
Question 7. Identification of accounting elements , debit – credit and Journal Entries

[ Based on Class work 1-3]
Balance Sheet of XYZ Company as on 31 March 2017
Assets Rs. In Cr.
Non-current Assets
PPE [ Original cost 100- Accumulated Depreciation 45.07) 54.93
Current Assets
Current Investments 10.00
Stock in Trade 100.00
Trade Receivables 40.00
Bank Balance 5.07
Total 210.00
Equity & Liabilities
Equity
Equity Share Capital 20.00
(2 cr. shares of Rs. 10 each)
Reserves & Surplus 80.00
Non-current Liabilities
Bank Loan 100.00
Current Liabilities
Trade Payables 10.00
Total 210.00
Transactions during the year 2017-18 :

(1)Purchases & Sales in order of date of transactions
Purchases Lot 1P 10,00,000 units @ Rs. 1100 pu +GST
Sale Lot 1S 19,00,000 units @ 1500 per unit +GST
Sales Lot 2S 19,50,000 units @ 1510 per unit +GST
Purchases Lot 3P 15,00,000 units @ Rs.1200 pu +GST
Sales Lot 3S 14,50,000 units @ Rs. 1520 per unit +GST
Opening stock : 10,00,000 units @ Rs. 1000 pu = Rs. 100 cr.

All purchases and sales were in credit. Payments were made to suppliers and payments were
collected from customers on regular basis.
At the year end Balance of Trade Payables Rs. 5 cr. and balance of Trade Receivables Rs. 10
cr.
GST on purchases is fully refundable and adjusted against GST payable on sales. Final
settlement of GST payable is pending. The company deposited GST of Rs. 15 Cr. from time
to time.
GST on goods purchased : 12%
GST on goods sold : 12%
[ GST References :
https://cleartax.in/s/gst-law-goods-and-services-tax]
(2) The company follows weighted average method of stock valuation.

Opening stock ( see Balance Sheet as on 31 March 2017) comprises of 10,00,000 units of
stock @ Rs. 1000 pu = Rs. 100 cr.
Record journal entry showing change in stock.
(3) Salaries & Wages for the year Rs. 30 cr. ; an advance of Rs. 1 cr. has been granted to
employees
(4) Other Expenses for the year Rs. 30 cr.; outstanding expenses Rs. 2 cr.
(5) PPE : Original cost Rs. 100 cr. Age 4 years as on 31.3.2017. Estimated scrap value Rs. 5
cr. Estimated useful life 20 years.
Depreciation is charged applying reducing balance method.
Reducing balance depreciation rate is worked out at 13.9108% ( up to four decimal places)
i.e. 1- &'!5/100
Balance as on 31.3.2017 = Original cost x ( 1- Reducing Balance Depreciation rate)4

= 100 x ( 1-13.9108%)4 = Rs. 54.928 Cr.
Accumulated depreciation = Rs. 100 cr.- Rs.54.93 Cr. = Rs. 42.07 Cr.
Charge depreciation for 2017-18. Record necessary journal entry.
(6) Interest on bank loan @ 9% was paid in full.
(7). Tax Rate : Basic. Tax rate 30% ; Surcharge 12% ; Cess 4%
Calculate current tax and record necessary journal entry
(8) Advance Tax Rs. 9.00 cr.
Required:
1.Prepare necessary journal entries for recording the above mentioned transaction.
2. Cash Book showing Bank A/c only
3. Trial Balance as on 31.3.2018.
[ Hints : Cash Book Balance Rs. 251.50 cr. Total of Trial Balance. Rs. 1087.61 cr.
Current Tax Rs. 9.47 Cr. Closing stock Rs. 23.90 cr.]
Question 8
1. Identification of accounting elements , debit – credit and Journal Entries
Assets Rs. In Cr.
Non-current Assets
PPE [ Original cost 100- Accumulated Depreciation 19) 81.00
Current Assets
Bank Balance 9.00
Total 180.00
Equity
Bank Loan 50.00
Current Liabilities
Total 180.00

cr.
to time.
[ GST References :
(2) The company follows weighted average method of stock valuation.

stock @ Rs. 1000 pu = Rs. 50 cr. The company follows weighted average method of stock
valuation.
(3) Salaries & Wages for the year Rs. 30 cr. ; an advance of Rs. 2 cr. has been granted to
employees
(4) Other Expenses for the year Rs. 30 cr.; outstanding expenses Rs. 5 cr.
(5) PPE : Original cost Rs. 100 cr. Age 4 years as on 31.3.2017. Estimated scrap value Rs. 5
cr. Estimated useful life 20 years.
Depreciation is charged applying straight line method.
Depreciation charge p.a. [ 100- 5]/20 = 4.75
Accumulated depreciation = Rs. 4.75 cr. x 4 = Rs. 19 cr.
Required:
Current Tax Rs. 17.39 Cr. Closing stock Rs. 59.75 cr.]
Question 9
1. Identification of accounting elements , debit – credit and Journal Entries
Assets Rs. In Cr.
Non-current Assets
PPE [ Original cost 100- Accumulated Depreciation 19) 152.50
Current Assets
Bank Balance 7.50
Total 260.00
Equity
Bank Loan 80.00
Current Liabilities
Total 260.00

cr.
to time.
[ GST References :
(2) The company follows FIFO method of stock valuation.
stock @ Rs. 1000 pu = Rs. 60 cr.
(3) Salaries & Wages for the year Rs. 30 cr. ; Outstanding wages Rs. 1 cr.
(4) Other Expenses for the year Rs. 30 cr.; Advance expenses Rs. 5 cr.
(5) PPE : Original cost Rs. 200 cr. Age 5 years as on 31.3.2017. Estimated scrap value Rs.
10 cr. Estimated useful life 20 years.
Depreciation is charged applying straight line method.
Depreciation charge p.a. [ 200- 5]/20 = 9.5
Accumulated depreciation = Rs. 9.5 cr. x 5 = Rs. 47.5 cr.
Required:
Current Tax Rs. 26.40 Cr. Closing stock Rs. 72 cr.]
Question 10
Identification of accounting and organizing into Trial Balance
Accountants of ABC Ltd. has collected the following account balances as on 31.3. 2018:
( Figures are in Rs. Cr.)
Trial Balance as on 31.3.2018
Dr. Cr.
1 Sales Income 3500.00
2 Purchased Stock Expense 1500.00
3 Stock in Trade 31.3.2017 Asset 150.00
4 PPE Asset 4000.00
5 Accumulated Depreciation Reversal of asset 2961.05
31.3.2017
6 GST Payable Liability 20.00
7 Salaries & Wages Expense 1100
8 Repairs & Maintenance Expense 250
9 Office expenses Expense 300
10 Audit fees Expense 10
11 Legal expenses Expense 25
12 Telephone & Internet Expense 5
13 Lighting Expense 14
14 Dividend income Income 20
15 Non-current Investments Asset 2000
16 Fair value reserve 31.3.2017 Equity 900
17 Deferred Tax Liability Liability 100
31.3.2017
18 Trade Receivables Asset 400
19 Trade Payables Liability 200

20 Cash & Cash Equivalents Asset 107.05
21 Equity Share Capital Equity 200
22 Retained Earnings 31.3.2017 Equity 1000
23 Dividend paid Equity - 200
24 Dividend distribution tax Equity - 40
25 Advance tax Asset 60
26 Bank Loan Liability 1400
27 Interest on Bank Loan Expense 140
10301.05 10301.05
The following information is not incorporated in account balances:

a. Stock in trade 31.3.2018. : 320 ;
b. Tax for the year is not yet computed. Compute current tax applying basic tax rate of
30%, surcharge 12% and cess 4%;
Dividend income on non-current investments is exempt from tax.
c. Fair value of non-current investments : 300 ; and deferred tax liability on such gain :
30.
d. Depreciation for the year 2017-18 is not worked out .Calculate depreciation based
on information given in Note -1.
Incorporate these items into Trial Balance.
Note -1 : PPE
Original cost 4000.00
Reducing Balance depreciation rate on PPE 13.9108%
Balance at the end of 9th year i.e.31.3.2017 1038.95
Accumulated depreciation at the end of 9th year 2961.05
[ Hints : Total Trial Balance : Rs.11008.99 cr. Tax Rs. 63.41 cr.]
Question 11
Preparation of Statement of Profit & Loss , Statement of Changes in Equity & Balance
Sheet
The following Trial Balance of ABC Ltd. has been prepared as on 31.3.2018:
Account Heads Accounting Elements Dr. Cr.
4 PPE Asset 4000.00
5 Accumulated Depreciation Reversal of asset 0 3105.57
31.3.2018
17 Deferred Tax Liability Liability 130
31.3.2018

28 Fair value gain Income 300
29 Deferred Tax expense Expense 30
30 Depreciation Expense 144.53
31 Change in stock Reversal of income 170
32 Current Tax Expense 63.41
33 Tax Provision Liability 63.41
11008.99 11008.99
Equity share are of Re. 10each ; equity shares to be issued in 2019 under ESOP : 20 cr.
Prepare Statement of Profit and Loss showing separately Other Comprehensive Income and
Basic and diluted EPS for the year ended on 31 March 2018, Statement of Changes in Equity
for the year ended on 31 March 2018 and Balance Sheet as on 31 March 2018.
[.PAT Rs. 138.06 cr. ; Other Equity. : Rs. 2068.06 cr. ; Total of Balance Sheet. :
4021.48 cr. ]
Question 12
Sheet
Given below is the Trial Balance as on 31.3.2018 of XYZ Ltd.
Sl No. Account Headings Accounting Dr Cr
Elements
4 PPE Asset 4000.00
31.3.2018
17 Deferred Tax Liability 31.3.2018 Liability 105
20 Cash & Cash Equivalents Asset 125

28 Fair value gain Income 250
29 Deferred Tax expense Expense 25
31 Change in stock Reversal of 170
income
32 Current Tax Expense
33 Tax Provision Liability
Total
Current tax has not been worked out. Compute current tax and complete the Trial Balance.
Dividend income is exempt from tax.
Equity share are of Re. 10 each ; equity shares to be issued in 2019 under ESOP : 10 cr.
[.PAT Rs. 313.24 cr. ; Other Equity. : Rs. 4018.24 cr. ; Total of Balance Sheet. : 6695
cr. ]
Question 13
Sheet
Given below is the Trial Balance as on 31.3.2018 of XYZ Ltd.
Trial Balance as on 31.3.2018
Sl No. Accounting Headings Accounting Dr Cr
Elements
4 PPE Asset 4000.00
31.3.2018
7 Salaries & Wages Expense 1100.00
8 Repairs & Maintenance Expense 500.00
9 Office expenses Expense 400.00
10 Audit fees Expense 10.00
11 Legal expenses Expense 30.00
12 Telephone & Internet Expense 5.00
13 Lighting Expense 15.00
14 Dividend income Income 40.00
15 Non-current Investments Asset 1800.00
16 Fair value reserve 31.3.2017 Equity 720.00
17 Deferred Tax Liability Liability 105.00
31.3.2018
18 Trade Receivables Asset 400.00

19 Trade Payables Liability 300.00
21 Equity Share Capital Equity 200.00
22 Retained Earnings 31.3.2017 Equity 3000.00
23 Dividend paid Equity - 200.00
24 Dividend distribution tax Equity - 40.00
26 Bank Loan Liability 2000.00
27 Interest on Bank Loan Expense 200.00
28 Fair value gain Income 250.00
29 Deferred Tax expense Expense 25.00
31 Change in stock Reversal of 170.00
income
32 Deferred Tax Benefit Expense
33 Deferred Tax Asset Liability
11075.00 11075.00
Compute deferred tax benefit out of loss which can be carried forward and set off against
future profit. Carry forward is allowed for 8 years. Deferred tax benefit is worked out @ 30%
at a conservative basis. For this purpose of computation of loss dividend income is not
included.
Equity share are of Re. 10 each ; equity shares to be issued in 2019 under ESOP : 10 cr.
[. Loss after tax adjustment Rs. – 366.00 cr. ; Other Equity. : Rs. 3139 cr. ; Total of
Balance Sheet. : Rs. 5679 cr. ]
See Part III
Question 14
Profitability ratios
Question 15
Du Pont Analysis
Question 16
Leverage Impact Analysis
Question 17
Liquidity Analysis and its impact on Return on Assets
Question 18
Analysis of Working Capital Policies
Question 19
Consolidation
Question 20
Consolidation

DCP 2018 Practice Question 7-13

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DCP 2018

Question 7. Identification of accounting elements , debit – credit and Journal Entries

Transactions during the year 2017-18 :

Opening stock : 10,00,000 units @ Rs. 1000 pu = Rs. 100 cr.

(2) The company follows weighted average method of stock valuation.

Balance as on 31.3.2017 = Original cost x ( 1- Reducing Balance Depreciation rate)4

Transactions during the year 2017-18 :

(2) The company follows weighted average method of stock valuation.

Transactions during the year 2017-18 :

1 Sales Income 3500.00

2 Purchased Stock Expense 1500.00

3 Stock in Trade 31.3.2017 Asset 150.00

4 PPE Asset 4000.00

5 Accumulated Depreciation Reversal of asset 2961.05

6 GST Payable Liability 20.00

7 Salaries & Wages Expense 1100

8 Repairs & Maintenance Expense 250

9 Office expenses Expense 300

10 Audit fees Expense 10

11 Legal expenses Expense 25

12 Telephone & Internet Expense 5

14 Dividend income Income 20

15 Non-current Investments Asset 2000

16 Fair value reserve 31.3.2017 Equity 900

17 Deferred Tax Liability Liability 100

18 Trade Receivables Asset 400

19 Trade Payables Liability 200

21 Equity Share Capital Equity 200

22 Retained Earnings 31.3.2017 Equity 1000

23 Dividend paid Equity - 200

24 Dividend distribution tax Equity - 40

25 Advance tax Asset 60

26 Bank Loan Liability 1400

27 Interest on Bank Loan Expense 140

The following information is not incorporated in account balances:

Original cost 4000.00

Reducing Balance depreciation rate on PPE 13.9108%

Balance at the end of 9th year i.e.31.3.2017 1038.95

Accumulated depreciation at the end of 9th year 2961.05

Account Heads Accounting Elements Dr. Cr.

1 Sales Income 3500.00

2 Purchased Stock Expense 1500.00

3 Stock in Trade 31.3.2018 Asset 320.00

4 PPE Asset 4000.00

5 Accumulated Depreciation Reversal of asset 0 3105.57

6 GST Payable Liability 20.00

7 Salaries & Wages Expense 1100

8 Repairs & Maintenance Expense 250

9 Office expenses Expense 300

10 Audit fees Expense 10

11 Legal expenses Expense 25

12 Telephone & Internet Expense 5

14 Dividend income Income 20

15 Non-current Investments Asset 2300

16 Fair value reserve 31.3.2017 Equity 900

17 Deferred Tax Liability Liability 130

18 Trade Receivables Asset 400

19 Trade Payables Liability 200

20 Cash & Cash Equivalents Asset 107.05

22 Retained Earnings 31.3.2017 Equity 1000

23 Dividend paid Equity - 200

24 Dividend distribution tax Equity - 40

25 Advance tax Asset 60

26 Bank Loan Liability 1400