Accounting for Managers

Assignment

Assignments
Program: MBA (2 Years) Sem-1
Subject Name
Accounting for Managers
Permanent Enrollment Number (PEN)
Roll Number (SEN)
Student Name

INSTRUCTIONS
a)

Students are required to submit all three assignment sets

ASSIGNMENT

DETAILS

MARKS

Assignment A

Five Subjective Questions

10

Assignment B

Three Subjective Questions + Case Study

10

Assignment C

40 Objective Questions

10

b)

Total weightage given to these assignments is 30%. OR 30 Marks c) All

assignments are to be completed as typed in word/pdf.
c) All questions are required to
be attempted.
d) All the three assignments are to be completed by due dates (specified from
time to time) and need to be submitted for evaluation by Amity University.

) Tick mark in front of the

assignments submitted

Assignment A

Copyright @ Amity
University

Assignment B

Assignment C

Page
2

Accounting for Managers

Assignment
Assignment: A
Problem 1:
Journalize the following transactions in the books of Mr. Walter:
a. Paid rent of building $ 12,000 half of the building is used by the proprietor
for residential use. b. Paid fire insurance of the above building in advance $
1,000.
c. Paid life insurance premium $ 2,000.
d. Paid income-tax $ 3,000.
e. Salary due to clerk $ 500.
f. Charge depreciation on furniture @ 10% p.a. for 1 month
(furniture $ 12,000). g. Provide interest on capital ($ 60,000) at
15% p.a. for 6 months.
h. Charge interest on drawing (10,000) at 18% p.a. for 6 months.
i. Provide interest on loan to Ram ($ 100,000) at 18% p.a. for 2 months.
j.
Charge interest on loan to Shyam ($ 200,000) at 18%
p.a. for 2 months. k.
Received commission $ 1,000 half of
which is in advance.
l. Brokerage due to us $ 500.
Answer:
Dat
e
a. 1

a. 2

Particular

Journal

Rent A/c
Dr.
To Cash A/c
(Being the rent paid for building)

L.F.

Dr. ($)
12,000

12,000

Drawings A/c
Dr.
To Rent A/c
(Being the rent for half building charged to
proprietor for residential use)

6,000

b.
1

Fire Insurance premium A/c

Dr.
To Cash A/c
(Being the Fire Insurance premium paid for
building)

1,000

b.
2

Drawings A/c
Dr.
Prepaid premium A/c
Dr.
To Fire Insurance premium A/c
(Being the Fire insurance premium for half building
charged to proprietor and remaining paid in
advance)

c.

Drawings A/c

Cr. ($)

6,000

1,000

500
500
1,000

2,000

Dr.

Accounting for Managers

Assignment

To Cash A/c
(Being the life insurance premium paid)
d.

e.

f.

g.

h.

i.

j.

k. 1

k. 2

l.

Drawings A/c
Dr.
To Cash A/c
(Being the income tax paid)

2,000
3,000
3,000

Salary A/c
Dr.
To Outstanding Salary A/c
(Being due salary paid to clerk)

500

Depreciation on Furniture A/c

Dr.
To Furniture A/c
(Being depreciation of 10% charged on furniture)

100

500

Interest on Capital A/c

Dr.
To Capital A/c
(Being interest on capital provided at 15% p.a. for 6
months)
Capital A/c
Dr.
To Interest on Drawings A/c
(Being interest on drawings of 18% charged on
drawings for 6 months)

100
4,500
4,500

900
900

Interest from Loan from Ram

Dr.
To Outstanding interest on Loan from Ram
(Being the interest from loan from Ram provided at
18% p.a. for 2 months)

3,000

Accrued Interest from Loan from Shyam

Dr.
To Interest from Loan from Shyam
(Being the interest from loan from Shyam charged
at 18% p.a. for 2 months)

6,000

Cash A/c
Dr.
To Commission A/c
(Being the commission received)

1,000

3,000

6,000

1,000

Commission A/c
Dr.
To Commission received in Advance A/c
(Being advance commission adjusted)

500

Accrued Brokerage A/c

Dr.
To Brokerage A/c
(Being brokerage due to us adjusted)

500

Problem 2:

500

500
Total

42,000

42,000

From following figures

Accounting for Managers

extracted
from the books of Mr. XYZ,
Assignment
st

Trading & Profit & Loss Account for the year ended 31
as on that date after making the necessary adjustments.

you are required to prepare a

March, 2008 and a Balance Sheet

Mr. XYZs Capital

Mr. XYZ Drawings
Plant & Machinery
Freehold property
Purchases
Rtuens outwards
Salaries
Office Expenses
Discount A/c (Dr.)
Sundry Debtors
Loan to Mr. Krish @10% p.a.
Balance on 1.4.2007
Cash at bank
Bills payable

228,800
Stock 1.4.2007
13,200
Wages
99,000
Sundry creditors
66,000
Postage & Telegrams
110,000
Insurance
1,100
Gas & fuel
13,200
Bad debts
2,750
Office rent
5,500
Loose tools
29,260
Factory lighting
44,000 Provision for doubtful debts
Interest on loan to Mr. Krish
29,260
Cash in hand
5,500
sales

38,500
35,200
44,000
1,540
1,760
2,970
660
2,860
2,900
1,100
880
1,100
2,640
231,440

Adjustments:
a.
b.

Stock on 31st March, 2008 was valued at $ 72,600

A new machine was installed during the year costing $15,400 but it is not
recorded in the books as on payment was made for it. Wages $ 1,100 paid for its
erection has been debited to the wages account.
c. Depreciate :
1) Plant & machine by 33.33%
2) Furniture by 10%
3) Freehold property by 6%
d. Loose tools were valued at $ 1.760 as on 31.3.2008
e. Of the sundry debtors Rs.660 are bad and should be written off.
f. Maintain a provision of 5% on sundry debtors for doubtful debts.
g. The manager is entitled to a commission of 10% of the net profits after charging such
commission.

Accounting for Managers

Assignment

Answer:

Dr
Particulars
To opening stock
To Purchases
Less: Returns
To Wages
Less: Wages for erection of
Machinery
To Gas & Fuel
To Factory lighting

Trading and Profit & Loss Account for the year ended on 31st March 2008
Amount ($)
Amount ($)
Particulars
Amount ($)
38,500
1,10,000
1,100
35,200
1,100

2,31,440
72,600

1,08,900
34,100
2,970
1,100
1,18,470

To Gross Profit c/d

Total
To Salaries
To Office Expenses
To Postage and Telegram
To Insurance
To Office Rent
To Discount
To Bad Debts
To Provision for
Doubtful debts
New Provision
Less: Old Provision
Depreciation:
+ On Machinery
+ On Furniture
+ On Freehold Property
+ On Loose Tools
To Commission to
Manager
To Net Profit c/d
Total

By Sales
By Closing Stock

Cr
Amount ($)

3,04,040
13,200
2,750
1,540
1,760
2,860
5,500
1,320
1,430
880
38,500
550
3,960
1,140

Total
By Gross Profit b/d
By Interest
+ Outstanding

3,04,040
1,18,470
1,100
3,300

4,400

550

44,150
4,476
44,764
1,22,870

Total

1,22,870

Accounting for Managers

Assignment

Liabilities
Mr. XYZs Capital
Less: Drawings
Add: Net Profit
Bills payable
Sundry Creditors
+ New Machinery
payment not made
Managers
Commission
Payable

Total

Problem 3:

Amount ($)
228,800
13,200
44,764
44000
15400

Balance Sheet of Mr.XYZ as on 31st March 2008

Amount ($)
Assets
Plant & Machinery
Add: New Machinery
(15400+1100)
2,60,364 Less: Depreciation
5,500 Freehold property
Less: Depreciation
59,400 Office Furniture
4476

3,29,740

Less: Depreciation
Loose tools
Less: Depreciation
Closing Stock
Sundry Debtors
Less: Bad Debt written
off
Less: Provision for
Doubtful debts
Loan to Krish @ 10%
Add: Interest
Outstanding
Cash at Bank
Cash at Hand
Total

Amount ($)
99,000
16500

Amount ($)

38,500
66,000
3,960
5,500

77,000

550

4,950

2900
1140

62,040

1,760
72,600

29,260
660
1430

27,170

44,000
3,300

47,300
29,260
2,640
3,24,720

Accounting
for
Managers
Following is the Trial Balance
of M/s. Trinity
Foods
as on 30th June 2007 (after closing Nominal
Assignment
Accounts). Prepare a
Balance Sheet on the basis of this trial balance.
Particulars

Debit (Rs.)

Cash
Capital
Bank
Furniture
Ram
Rahim
Trading & Profit & Loss

10,00
0
77,00
0
25,00
0
50,00
0
162,0
00

Credit (in Rs.)

100,00
0
15,00
0
47,00
0
162,0
00

Answer:
Balance Sheet of M/s Trinity Foods as on 30th June 2007
Liabilities
Capital
Ram
Trading & Profit & Loss
Total

Amount (Rs)

1,00,000
15,000
47,000
1,62,000

Cash
Bank
Furniture
Rahim

Assets

Total

Amount (Rs)

10,000
77,000
25,000
50,000
1,62,000

Problem 4:
Given below are the financial statements of Safal Enterprises, using the tool of ratio
analysis comment on the profitability and liquidity position of the firm for the year 200607. Total no. of shares outstanding for the firm is
2.69crores. In the view of growth opportunities in the near future the firm has been
maintaining a policy of 45%
payout.

Summarized P & L of Safal Enterprises

For the year ended 31 March
Particula
rs

200
6

Sales
Other income
Cost of sales
Gross margin
Operating expenses
Administration
Selling & distribution
Profit before interest & tax (PBIT)
Interest
Profit before tax (PBT)
Provision for taxes
Profit after tax (PAT)

( Rs. In
crores)
132.0
0
12.00
102.9
6
29.04
12.44
4.42
24.18
3.00
21.18
7.94
13.24

200
7
144.0
0
15.00
110.0
2
33.98
14.36
5.36
29.26
4.01
25.26
9.47
15.79

Balance Sheet of Safal Enterprises

Particula
rs
Assets
Fixed assets
Current assets
Inventory
Accounts receivable
Cash
Less: Current liabilities
Net current assets
Total Assets
Liabilities &owners equity
Share capital
Reserves & Surplus
Debt(long term)
Total

31/03/06

31/03/07
(Rs in
crores)
31.25
37.50
14.56
13.20
1.50
8.55
20.71
51.96

16.64
15.43
1.75
11.25
22.57
60.07

27.00
4.96
20.00
51.96

27.00
6.36
26.71
60.07

Problem 5:
Given below are the balance sheets of the two firms- Gloria Ltd and Victoria Ltd as on 31st
March 2007.

Assets
Cash and Bank
balance
Marketable
securities
Sundry debtors
Prepaid expenses
Stock
Current Assets
Fixed Assets (Net)

Total Assets
Liabilities and
Owners
Equit
Sundry creditors
Notes payable
Long term debt
Equity
Total

Gloria Ltd.

Victoria Ltd.

12.70
10.00
22.00
93.50
1.12
139.32
589.00

38.60
21.00
23.70
162.4
5
2.14
247.
89
642.
00

728.32
6.75
6.56
130.01
585.00
728.32

889.
89
26.45
6.44
345.0
0
512.0
0
889.8
9

Can the financial positions of the two firms be compared assuming that the two firms fall in the
same industry?

Assignment: B
Problem 1:
Find out the cost of raw material purchased from the data given below:
Particulars

Rs.

Prime cost

200,000

Closing stock of raw material

20,000

Direct labour cost

100,000

Expenses on purchases

10,000

Problem 2:
The product of a manufacturing concern passes through two processes A and B and then
to finished stock. It is ascertained that in process A normally 5% of the total input is scrap
which realizes Rs. 80 per tone.
From the following information relating to process A for the month of August 2007, prepare
process A account
Materials
Cost of materials
Wages
Manufacturing overheads
Output

500 tonnes
Rs. 125 per tonne
Rs. 14,000
Rs. 4,000
415 tonnes

Problem 3:
Ahmedabad Company Ltd. manufactures and sells four types of products under the brand
name Ambience, Luxury, Comfort and Lavish. The sales mix in value comprises the following:
Brand name
Ambience

Percenta
ge
33 1/3

Luxury

41 2/3

Comfort

16 2/3

Lavish

8 1/3

-----10
0

The total budgeted sales (100%) are $ 600,000 per month. The
operating costs are: Ambience
Luxury

60% of selling price Luxury

68% of selling

price Comfort Comfort

80%

of selling price Lavish Lavish

40% of selling price
The fixed costs are $. 159,000 per month.

A) Calculate the breakeven point for the products on an overall basis.

b) It has been proposed to change the sales mix as follows, with the sales per month remaining
at $. 6,00,000:
Brand
Name
Ambience

Percent
age
25

Luxury

40

Comfort

30

Lavish

05
--100

Assuming that this proposal is implemented, calculate the new breakeven point.

Case study:
Bajaj Auto Limited: The Unprecedented Growth Story
Bajaj Auto Limited is the flagship company of the Bajaj Group. The company manufactures
two & three wheelers. Mr. Rahul Bajaj is the present Chairman of the company. The company
was incorporated in the year 1945 as M/s Bachraj Trading Corporation Private Ltd. The
promoters hold about 30% equity, whereas Indian public holds about
26% and institutional investors have more than 27% stake
in the company.
The products manufactured by Bajaj Auto are scooters, motor cycles, auto spares parts,
machine tools, steel and engineering products. The company also produces three- wheelers
as goods carriers such as pick-up or delivery vans and passenger carriers such as autorickshaws. Bajaj Auto has a network of 498 dealers, 1,500 authorized service centres and 162
exclusive three-wheeler dealers spread across the country.
Bajaj Auto has also diversified into the general as well as life insurance business through its
subsidiaries Bajaj Allianz General Insurance Company Ltd, respectively. The Bajaj brand has
presence in many countries such as Sri Lanka, Mexico, Bangladesh, Columbia, Peru, Egypt,
etc. The main competitors of the company in the two-wheelers and three- wheelers segment
are- Hero Honda Motors Ltd, Kinetic Motor Co Ltd, LML ltd, Maharashtra Scooters Ltd, and TVS
Motor Co. Ltd.
The company sold close to 23 lakh vehicles in 2005-06, which is a record performance in its
history. The sales of motorcycles manufactured grew by 32% in 2005-06 compared to a
market growth of below 19%. For the fifth successive year, the company raised its market
share in the motorcycle segment. Today it stands at almost 31%. Sales increased by almost
31% to an all-time high of Rs 9,285 crore in 2005-06. the export of the company in all its
product categories has also been unprecedented during the FY 2005-06 as is reflected in the
figures given below:
Table A Product-wise exports of Bajaj Auto Ltd
Produ
ct
Motorcycles
Total twowheelers
Three-wheelers
Total vehicles

2005-06

2004-05

( in
165,28 numbers )
8
174,90
7
75,29
7
250,20
4

123,94
6
130,94
5
65,76
5
196,71
0

Growt
(in h
percentage)
33
34
14
27

Even more impressive has been the growth in companys operating EBITDA, which
increased by 47% to touch Rs

1805 crore during 2005-06. Consequently the operating EBITDA margin grew by 220 basis
points to 17.9% of the sales and operating income. Earnings per share have been risen from
Rs 75.60 to Rs 111.00 in the current year. Dividend too has grown to Rs 40 per share (400%)
for the year ended 31st March 2006 as against Rs 25 per share in
200
5.

Over the past few years, Bajaj Auto has focused on his technology development, and product
development in anticipation of market needs, scaling up its manufacturing facilities,
implementing best-in-class production systems, rationalizing vendors, slashing costs while
upgrading
quality,
restructuring
dealerships,
and
distribution channels. These
capabilities enabled the company to create exciting new products, which have set
benchmarks in styling, design, and technology. The companys products are creating a
customer pull at all price points and the company has now transformed from being a price
warrior to a price leader. The results of these strategies are reflected in its financial
statements as follows (refer Table B and C):

Table B Profit and Loss Account for Bajaj Auto Ltd for the year
ended
March
2003
Sale
Others income
Change in stocks
Expenditure
Profit & Loss

March
2004

March
2005

March

4987.05
297.10
32.92
5317.07
4335.16

(Rs in
crore) 7078.06
5721.44
507.04
516.41
10.8
-11.57
7
6239.35
7582.90
5017.92
6286.91

9284.84
602.52
50.10
9937.46
8131.87

981.91
1.1
2
171.42
809.37
274.44
534.93
159.81

1221.43
0.9
4
184.32
1036.17
285.41
750.76
285.37

1805.59
0.3
4
191.28
1613.97
509.37
1104.60
461.50

PBDI
T
Interes
t
Depreciation
PBT
Tax provision
PAT
Dividen
ds

1295.99
0.6
7
185.66
1109.66
349.32
760.34
288.64

Table C Assets and Liabilities of Bajaj Auto Ltd as on 31 March

2006
Liabilities
Net Worth
Paid up Equity

Mar 05
Rs in
4447.1
6101.18

Mar 06
crore
5349.7
9101.18

Bonus Equity

114.17

114.17

Minority interest

89.46

148.79

Asse
ts

Mar 05
Rs in
2870.0
2 9.1
4

Mar 06
crore
3092.2
825.26

Less:
cumulative

1660.32

1834.19

Net fixed
Assets

1205.64

1230.77

Gross fixed
assets
Capital WIP

Reserves &

4256.5
2

5099.8
2

Investments

5273.8
3

6865.4
3

Free reserves
Share premium
Other free
reserves
Specific
reserves
Borrowings
Deferred tax

4233.28 5076.58
87.07

285.78

Deferred tax
Inventories

9.2
0

6.43

224.70

274.47

4146.21 4790.80
23.24
23.24
1229.17 1469.44

Receivables
Sundry debtors
Debtors
exceeding

3116.05
176.97
0.2
0

5799.11
302.54
1.13

139.90

Advances/loans
to

62.29

33.66

34.44

19.41

87.58

Current
liabilities

4284.64 7773.20

Group/associate

Sundry
Creditors
Other current

833.86 1404.40
1169.04 3674.37

Other
companies
Advance
payment

27.85
1823.60

14.25
1869.40

Provisions

2281.74 2694.43

Other
receivables
Cash & Bank

1053.19
266.88

3593.51
476.48

Intangible/DR
E
Total
Liabilities

10100.
87

14680.
01

Total Assets

4.5
7

27.32

10100.8 14680.
7
01

Notwithstanding its excellent financial performance in the years following its major strategic
shift, the management of the firm believes in the philosophy that the quest for perfection is
eternal.

To preclude the complacency from setting in, the management not only sets higher standards
it also continuously monitors its performance and benchmarks with the industry performance
in general and their closest competitors results in particular.

Discu
ss
1.
2.

Is the profitability performance of the firm satisfactory? If not, how can it be improved?
How attractive is the firm from the short-term and long-term lenders,
perspective? Does the firm appear to be the favorite destination in the automobile
sector (two-wheelers and three-wheelers segment) for the lenders?
3. How efficient is the firm been in utilizing the resources at its disposal? How do you
think the company can
improve upon its efficiency?

Accounting for Managers

Assignment

Copyright @ Amity University

Page 12

Assignment: C
State whether the following are
true or false:
1.

Accounting is a language of business. - True

2.

Accounting is a service function. - True

3. Accounting records only those transactions and events which are financial character. True
4.

Drawings reduce capital. - True

5.

Capital is increased by profit and decreased by losses. - True

6. The system of recording transaction on the basis of their two old aspects is called
double entry system. - True
7.

Purchases made from B for cash should be debited to B. - False

8.

Earnings of revenue means increase in Cash/Bank balance

9.

The balance of an account is always known by the side which is shorter.

10. The return of goods by a customer should be debited to Returns Inwards Account. - True
11. Goods bought for resale are referred to as Stocks
12. If the business has any liability, the proprietors capital must be more than the total
assets.
13. Withdrawal of money by the owner is an expense for the business. - False
14. Ledger is called the book of final entry. - True
15. Cash book is used to record all receipts and payments of cash. - True
16. Sales book is used to record all credit sales. False, it also records cash sales
17. The journal is not a book of original entry. True
18. Goodwill is an intangible asset. - True
19. Salaries & Wages appearing in the trial balance are shown on the liabilities side of the
balance sheet.
20. The profit & loss account is one of the financial statements.
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University

Page
13

21. Share having preferential right as to dividend and repayment of capital are termed as
equity share capital.
22. Shares which are not preference shares are called equity shares.

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University

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14

23. The amount of share premium received by the company is shown under the heading
reserves & surplus in
the companys balance sheet.
24. Debenture holders are not the member of the company.
25. There are no legal restrictions, similar to shares, for issue of debentures at discount.
26. Fixed cost per unit remains constant.
27. Direct cost is that cost which can not be easily allocated to cost units.
28. Selling overheads form a part of cost of production.
29. Manufacturing and administrative overheads are different.
30. Total fixed cost remains unaffected by the change in volume of output.
31. Variable cost per unit remains fixed.
32. In chemical industries unit costing is used.
33. The output of a process is transferred to next process.
34. Good units bear the abnormal loss arising in the process costing.
35. Excess of pre-estimated loss over actual loss is known as abnormal loss.
36. Marginal costing is a method of ascertaining cost.
37. A firm earns no profit or incurs no loss at BEP. True
38. Margin of Safety implies Break Even Point.
39. In marginal costing, stock is valued at fixed costs.
40. Sales below BEP mean profit. false