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Gurukripas Guideline Answers for May 2015 CA Inter (IPC) Group I Accounting
Note: All Page References given are from Padhukas Ready Referencer on Accounting For CA Inter (IPC)
Particulars `
CASH FLOW FROM INVESTING ACTIVITIES
Unsecured Loans given to subsidiary (4,85,000)
Interest on Loan received from Subsidiary Companies 82,500
PreAcquisition Dividend received on Investment 62,400
Interest Received on Investment (68,000 TDS 8,200) 59,800
Proceeds on Sale of Plant (84,000 9,600) 74,400
NET CASH USED IN INVESTING ACTIVITIES (2,05,900)
Note:
1. Plant acquired by Issue of 8% Debentures will not be considered in CFS, as Cash is not involved. They are disclosed in
Notes to Accounts.
2. Claims received for Loss of Plant in Fire is an Extraordinary Item, shown under Operating Activities.
3. Debenture Interest paid will be shown under Financing Activities
4. Term Loan Repaid will be shown under Financing Activities.
May 2015.1
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Gurukripas Guideline Answers for May 2015 CA Inter (IPC) Group I Accounting
The variation in Cost and Revenue in Year 2 has been approved by the customer.
Compute yearwise amount of Revenue, Expenses, Contract Cost to complete and Profit or Loss to be recognised in the
Statement of Profit or Loss as per AS7.
Solution: Similar to Page No.B.5.17, Q.No.49
The Contract Revenues, Costs & Profits recognised in each of the 3 years are given below (in ` Lakhs)
Upto reporting date Already recognised Recognised during
Year Particulars
in previous years current year
1 Contract Revenue 9,000 26% = 2,340 Nil 2,340
Contract Costs 2,093 Nil 2,093
Contract Profits 247 Nil 247
May 2015.2
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Gurukripas Guideline Answers for May 2015 CA Inter (IPC) Group I Accounting
Solution: Similar to Page No.B.4.6, Q.No.22,23 [P (A/c) M 03, N 03, N 05, N 10, M 10, N 11, N 12]
1. Book Value of Plant & Machinery on 01.04.2014 (using SLM Depreciation) = ` 2,05,000
2. Total Depreciation charged till 31.03.2014 under SLM = 60,000 2 = ` 1,20,000
3. Change in Method of Depreciation is permissible only for
(a) Compliance with Statutory Requirement, or
(b) Compliance with an Accounting Standard, or
(c) Consideration that the change would result in a more appropriate preparation or presentation of the Financilal
Statements of the enterprise.
4. Disclosure: A change in the method of charging depreciation is treated as a change in accounting policy and its effect is
quantified and disclosed.
5. Treatment in 20142015:
(a) Debit Asset & Credit P & L, by ` 3,000 (` 2,08,000 2,05,000) [Excess Depreciation to be reversed]
(b) Charge Depreciation at 20% on ` 2,08,000 = ` 41,600 (WDV basis)
(c) Net Book Value of Machine on 31032015 after the above = ` 2,08,000 ` 41,600 = ` 1,66,400
(d) The Company has to disclose that due to change in method of depreciation, there is a reversal of excess
depreciation of ` 3,000 and the Asset Value increased by ` 3,000 and Profits increased by ` 3,000. Such change will
have effect in future years also.
May 2015.3
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Gurukripas Guideline Answers for May 2015 CA Inter (IPC) Group I Accounting
May 2015.4
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Gurukripas Guideline Answers for May 2015 CA Inter (IPC) Group I Accounting
May 2015.5
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Gurukripas Guideline Answers for May 2015 CA Inter (IPC) Group I Accounting
2. Statement showing calculation of Profit / Losses for Pre and Post Incorporation Periods
Total Ratio Post
Particulars Pre Incorpn.
Incorpn.
Turnover (Apportioned in Sales Ratio) 2,40,00,000 1:6 34,28,571 2,05,71,429
Add: Apportionment of Other Income
Interest on Investments 6,00,000 6,00,000
Bad Debts Recovered 50,000 50,000
A. Total Income 2,46,50,000 40,78,571 2,05,71,429
B. Apportionment of Expenses
Cost of Goods Sold 102,00,000 1:6 14,57,143 87,42,857
Advertisement Expenses 3,00,000 1:6 42,857 2,57,143
Sales Commission 6,00,000 1:6 85,714 5,14,286
Salary 18,00,000 1:5 3,00,000 15,00,000
Managing Directors Remuneration 6,00,000 Post 6,00,000
Interest on Debentures 2,00,000 Post 2,00,000
Rent (Note 1d) 5,50,000 92,500 4,57,500
Bad Debts 1,50,000 1:6 21,429 1,28,571
Underwriting Commission 2,00,000 Post 2,00,000
Audit Fees 2,00,000 Post 2,00,000
Loss on Sale of Investment 1,00,000 Pre 1,00,000
Depreciation 4,00,000 1:3 1,00,000 3,00,000
Total Expenses 1,53,00,000 21,99,643 1,31,00,357
C. Profit (A B) 93,50,000 18,78,928 74,71,072
May 2015.6
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Gurukripas Guideline Answers for May 2015 CA Inter (IPC) Group I Accounting
3. Accounting Treatment: PreIncorporation Profit is transferred to Capital Reserve A/c. Alternatively, the amount may
be set off against the Goodwill, if any, arising on acquisition of business.
Question 3(b): Insurance Claims Loss of Profits Computation of Policy Amount 6 Marks
M/s. Platinum Jewellers wants to take up a Loss of Profit Policy for the Year 2015. The Extract of the Profit and Loss Account
of the previous year ended 31.12.2014 is provided below:
Variable Expenses: Cost of Materials 18,60,000
Fixed Expenses: Wages for Skilled Craftsmen 1,60,000
Salaries 2,80,000
Audit Fees 40,000
Rent 64,000
Bank Charges 18,000
Interest Income 44,000
Net Profit 6,72,000
Turnover is expected to grow by 25% next year.
To meet the growing Working Capital needs, the Partners have decided to avail Overdraft Facilities from their Bankers @ 12%
p.a. interest. The Average Daily Overdraft Balance will be around ` 2 Lakhs. The Wages for the Skilled Craftsmen will increase
by 20% and Salaries by 10% in the current year. All other expenses will remain the same.
Determine the amount of policy to be taken up for the current year by M/s. Platinum Jewellers.
May 2015.7
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Gurukripas Guideline Answers for May 2015 CA Inter (IPC) Group I Accounting
1. Sales for the year ended 31.03.2014 was ` 18,60,000. Sales for the current year was 20% higher than the last year.
2. 25% Sales were made in cash and the balance was on credit.
3. Gross Profit on Sales is 30%
4. Terms of Credit: Debtors 2 Months, Creditors 1 month. All Creditors are paid by Cheque and all Sales are collected in
Cheque.
5. The Bank Pass Book has the following details (other than payment to Creditors and collection from Debtors)
Machinery purchased 1,14,000 Repairs 36,500
Rent paid 1,32,000 Sales of Furniture 9,500
Advertisement Expenses 80,000 Cash withdrawn for Petty Expenses 28,300
Travelling Expenses 78,400 Interest paid on Unsecured Loan 8,750
6. Machinery was purchased on 01.10.2014.
7. Rent was paid for 11 months only and 25% of the Advertisement Expenses relates to the next year.
8. Travelling Expenses of ` 7,800 for which Cheques were issued but not presented in bank.
9. Furniture was sold on 01.04.2014 at a loss of ` 2,900 on Book Value.
10. Physical Verification as on 31.03.2015 ascertained the Stock Position at ` 1,81,000 and Petty Cash Balance at Nil.
11. There was no change in Unsecured Loans during the year.
12. Depreciation is to be provided at 10% on Machinery and 20% on Furniture.
Prepare Bank A/c, Trading and Profit & Loss A/c for the year ended 31.03.2015, in the books of M/s. Care Traders and a Balance
Sheet as on that date. Make necessary assumptions wherever necessary.
Solution: Similar to Page No.A.3.59 Q.No.36, [N 02] and other Illustrations in this Chapter
May 2015.8
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Gurukripas Guideline Answers for May 2015 CA Inter (IPC) Group I Accounting
7. Machinery Account
Particulars ` Particulars `
To balance b/d 8,25,500 By Depreciation (8,25,500 10%)+(1,14,000 10% 6/12) 88,250
To Bank 1,14,000 By balance c/d 8,51,250
Total 9,39,500 Total 9,39,500
Note: Alternatively, Depreciation can be assumed at 10% on Book Value irrespective of date of addition.
8. Furniture Account
Particulars ` Particulars `
To balance b/d 1,28,700 By
Bank (Sale Proceeds) 9,500
By
Loss on Sale 2,900
By
Depreciation (1,16,300 20%) (Note) 23,260
By
balance c/d 93,040
Total 1,28,700 Total 1,28,700
Note: Depreciation = 20% on (1,28,700 9,500 2,900) = 23,260
9. Bank Account
Particulars ` Particulars `
To Balance b/d 12,800 By Creditors (WN 6) 14,86,250
To Debtors Collections received (WN 4) 16,24,600 By Machinery 1,14,000
To Cash Sales (WN 1) 5,58,000 By Rent 1,32,000
To Furniture 9,500 By Advertisement 80,000
By Repairs 36,500
By Travelling (78,400 + 7,800) (Cheque issued) 86,200
By Petty Expenses 28,300
By Interest 8,750
By balance c/d (balancing figure) 2,32,900
Total 22,04,900 Total 22,04,900
10. Profit & Loss Account for the year ended 31.03.2015
Particulars ` Particulars `
1,32,000
To Rent ( 12) 1,44,000 By Gross Profit 6,69,600
11
To Advertisement (80,000 75%) 60,000
To Travelling Expenses 86,200
To Loss on Sale of Furniture 2,900
To Depreciation (88,250 + 23,260) 1,11,510
To Repairs 36,500
To Petty Expenses 28,300
To Interest (1,75,000 10%) 17,500
To Net Profit (balancing figure) 1,82,690
Total 6,69,600 Total 6,69,600
By Opening Balance b/d 1,47,800
To Closing Balance c/d 3,30,490 By Net Profits for the year as above 1,82,690
Total 3,30,490 Total 3,30,490
May 2015.9
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Gurukripas Guideline Answers for May 2015 CA Inter (IPC) Group I Accounting
Question 5(a): Hire Purchase Accounting Cash Price, Repossession, Ledger A/cs 8 Marks
Lucky bought 2 tractors from Happy on 01.10.2011 on the following terms:
Description `
Down Payment 5,00,000
1st Installment at the end of First Year 2,65,000
2nd Installment at the end of Second Year 2,45,000
3rd Installment at the end of Third Year 2,75,000
Interest is charged at 10% p.a
Lucky provides Depreciation @ 20% on the Diminishing Balances.
On 30.09.2014, Lucky failed to pay the 3rd Installment upon which Happy repossessed 1 Tractor. Happy agreed to leave one
tractor with Lucky and adjusted the value of the Tractor against the amount due. The Tractor taken over was valued on the
basis of 30% depreciation annually on written down basis. The balance amount remaining in the Vendors Account after the
above adjustment was paid by Lucky after 3 Months with Interest @ 18% p.a.
Solution: Similar to Page A.5.73 Q.No.2 [N 12], and Page A.5.80 Q.No.14 [M 90]
2.Tractor A/c
Date Particulars ` Date Particulars `
01.10.11 To Bank A/c(Down Payment) 5,00,000 30.09.12 By Depreciation (11,50,000 20%) 2,30,000
01.10.11 To Happy A/c 6,50,000 30.09.12 By balance c/d 9,20,000
Total 11,50,000 Total 11,50,000
01.10.12 To balance b/d 9,20,000 30.09.13 By Depreciation (9,20,000 20%) 1,84,000
30.09.13 By balance c/d 7,36,000
Total 9,20,000 Total 9,20,000
May 2015.10
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Gurukripas Guideline Answers for May 2015 CA Inter (IPC) Group I Accounting
3.Happy A/c
Date Particulars ` Date Particulars `
30.09.12 To Bank A/c 2,65,000 01.10.11 By Tractor A/c 6,50,000
30.09.12 To Balance c/d (bal.fig) 4,50,000 01.10.11 By Interest (6,50,000 10%) 65,000
Total 7,15,000 Total 7,15,000
30.09.13 To Bank 2,45,000 01.10.12 By Balance b/d 4,50,000
30.09.13 To Balance c/d 2,50,000 01.10.12 By Interest 45,000
Total 4,95,000 Total 4,95,000
30.09.14 To Tractor A/c (take over) 1,97,225 01.10.13 By Balance b/d 2,50,000
30.09.14 To Balance c/d 77,775 01.10.13 By Interest 25,000
Total 2,75,000 Total 2,75,000
31.12.14 To Bank A/c 81,275 01.10.14 By balance b/d 77,775
31.12.14 By Interest (77,77518% 3/12) 3,500
Total 81,275 Total 81,275
Question 5(b): Accounting for Investments ExInterest & CumInterest Transactions 8 Marks
Mr. Chatur had 12% Debentures of Face Value ` 100 of M/s. Unnati Ltd as Current Investments.
He provides the following details relating to the Investments.
01.04.2014 Opening Balance 4,000 Debentures costing `98 each
01.06.2014 Purchased 2,000 Debentures @ `120 cum Interest
01.09.2014 Sold 3,000 Debentures @ ` 110 cum interest
01.12.2014 Sold 2,000 Debentures @ ` 105 ex interest
31.01.2015 Purchased 3,000 Debentures @ ` 100 ex interest
31.03.2015 Market Value of the Investments ` 105 each
Mr. Chatur closes his books on 31.03.2015. He incurred 2% Brokerage for all his transactions. Show Investment Account in the
Books of Mr. Chatur, assuming FIFO Method is followed.
May 2015.11
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Gurukripas Guideline Answers for May 2015 CA Inter (IPC) Group I Accounting
Investment in 12% Debentures of M/s Unnati Ltd A/c (in Chaturs Books)
Date Particulars ` FV ` Int. ` Cost Date Particulars ` FV ` Int. ` Cost
01.04.14 To bal. b/d 4,00,000 (4,00098) 30.06.14 By Bank 36,000
3,92,000 Int recd (WN 1b)
01.06.14 To Bank 2,00,000 10,000 2,34,800 01.09.14 By Bank 3,00,000 6,000 3,17,400
(WN 2) (WN 3)
01.09.14 To P&L 23,400 01.12.14 By Bank 2,00,000 10,000 2,05,800
Profit tfr (WN 3)
31.01.15 To Bank 3,00,000 3,000 3,06,000 01.12.14 By P&LLoss 9,600
(100 + 2%) transfer
31.03.15 To P&L 45,000 31.12.14 By Bank 6,000
Interest tfr Int recd (WN 1e)
31.03.15 By P&L 3,400
(WN 4)
31.03.15 By bal.c/d 4,00,000 4,20,000
Total 9,00,000 58,000 9,56,200 Total 9,00,000 58,000 9,56,200
Question 6: Partnership Accounts Admission cum Retirement Final Accounts, Time Proportion Analysis 16 Marks
A and B who carry on Partnership Business in the name of M/s. AB Ltd, closes their Firms account as on 31st March each year.
Their Partnership agreement provides:
May 2015.12
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Gurukripas Guideline Answers for May 2015 CA Inter (IPC) Group I Accounting
A retired from the Firm on 30th September 2014 and on the same day C an Employee of the Firm was admitted as Partner.
Further, Profits or Losses shall be shared B: 3/5 and C: 2/5. Necessary Accounting Entries adjustments were pending up
to 31.03.2015. You are given the following further information:
(i) The value of Firms Goodwill as on 30th September 2014 was agreed to `15,000.
(ii) The Stock as on 31st March 2015 was valued at ` 18,550.
(iii) Partners Drawings which are included in Salaries: A ` 2,000, B ` 3,000 and C ` 1,000.
(iv) Salaries also includes ` 1,500 paid to C prior to his being admitted as a Partner.
(v) Bad Debts of ` 500 related to the period upto 30th September 2014.
(vi) As on 31st March 2015, Rent paid in Advance amounted to ` 600 and Trade Expenses accrued amounted to ` 250.
(vii) Provision is to be made for Depreciation on Plant and Machinery and on Motor Car at the rate of 10% p.a. on cost.
(viii) A Bad Debts provision, specially attributable to the second half of the year, is to be made @ 5% on Debtors as on 31st
March 2015.
(ix) Amount payable to A on retirement remained unpaid till 31st March 2015.
May 2015.13
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Gurukripas Guideline Answers for May 2015 CA Inter (IPC) Group I Accounting
2. Profit and Loss Account for the year ended 31st March 2015
Upto 1.10.14 to Upto 1.10.14 to
Particulars Particulars
30.9.2014 30.9.2015 30.9.2014 30.9.2015
To Salaries [Note (a)] 6,750 5,250 By Gross Profit b/d 19,525 19,525
To Trade Expenses (1,000 + 250) 625 625 (Time Basis 6 Months each)
To Rent and Rates (3,000 600) 1,200 1,200
To Bad Debts(given) 500 400
To Provision for Doubtful Debts 270
(5% on 5,400)
To Depreciation [Note (b)] 2,600 2,600
To Office Maintenance 600 600
To Conveyance 250 250
To Travelling Expenses 400 400
To Interest on As Loan 1,638
To Net Profit (balancing figure) 6,600 6,292
Total 19,525 19,525 Total 19,525 19,525
Allocation of Expenses
Note (a) Salary Note (b) Depreciation P&M Car
Particulars ` (a) Cost 22,000 30,000
As per Trial Balance 18,000 (b) Accum. Deprn upto 31.03.2014 4,400 6,000
Less: Partners Drawings (2,000 + 3,000 + 1,000) (6,000) (c) Deprn for 20142015 (on SLM) 2,200 3,000
Less: Cs Salary included in above (1,500) (d) Accum.Depreciation at year end 6,600 9,000
Total 10,500 (e) Net Book Value at year end 15,400 21,000
Hence,
I Half II Half Total Depreciation 5,200
Time Basis 50% 5,250 5,250 (a) I Half 2,600
Add: Cs Salary (Direct) 1,500 (b) II Half 2,600
Total 6,750 5,250
May 2015.14
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Gurukripas Guideline Answers for May 2015 CA Inter (IPC) Group I Accounting
7. As Loan A/c
Particulars ` Particulars `
To balance c/d 38,038 By Transfer from Capital A/c (32,000 + 4,400) 36,400
By Profit and Loss A/c (36,400 9% 6/12) 1,638
Total 38,038 Total 38,038
Particulars `
Opening Balance of Sports Material as on 01.04.2014 56,800
Closing Balance of Sports Material as on 31.03.2015 32,900
Sports Material purchased in Cash 23,500
Payment made to Creditors of Sports Material 64,300
Creditors for Sports Material Opening 23,200
Closing 29,400
Out of the Total Sports Material used during the year, 40% was consumed by the Club and the remaining was sold at a Profit of
20% on Cost.
Solution: Similar to Page No. A.4.64 Q.No.39 (Working Notes 4,6) and Other Illustrations
May 2015.15
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Gurukripas Guideline Answers for May 2015 CA Inter (IPC) Group I Accounting
Question 7 (c): AS9 Revenue Recognition Treatment in Special Cases Sale of Goods 4 Marks
Given the following information of M/s. Paper Products Ltd.
(i) Goods of ` 60,000 were sold on 20.03.2015 but at the request of the Buyer these were delivered on 10.04.2015.
(ii) On 15.01.2015 goods of ` 1,50,000 were sent on consignment basis of which 20% of the goods unsold are lying with the
consignee as on 31.03.2015.
(iii) ` 1,20,000 worth of goods were sold on approval basis on 01.12.2014. The period of approval was 3 months after which
they were considered sold. Buyer sent approval for 75% goods up to 31.01.2015 and no approval or disapproval received
for the remaining goods till 31.03.2015.
(iv) Apart from the above, the Company has made Cash Sales of ` 7,80,000 (Gross). Trade Discount of 5% was allowed on the
Cash Sales.
You are required to advise the Accountant of M/s. Paper Products Ltd, with valid reasons, the amount to be recognized as
Revenue in above cases under AS9 and also determine the total revenue to be recognized for the year ending 31.03.2015.
Solution: Refer Page No. B.6.7 Para 3
May 2015.16
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Gurukripas Guideline Answers for May 2015 CA Inter (IPC) Group I Accounting
1. Business Requirements: The Enterprise should identify its business requirements and try to match its requirement
with functionalities offered by different software providers.
2. Reports: Software which is able to provide all the requisite reports (both routine and exception reporting) in a format
understandable to the User, should be preferred.
3. Ease of Use: Software which is easier to use (both interface and performancewise), should be considered. Software
which are very high on GUI may fall short on performance (speed) while handling high volume data.
4. Cost: Packages having more features cannot be opted because of the prohibitive high costs.
5. Support: Vendor Support is essential for any software. A Stable Vendor with reputation and good track record will
always be preferred.
6. Regular Updates: Software which is constantly updated should be preferred against those Software where Vendors
do not update their Software regularly.
Question 7 (e): AS10 Accounting for Fixed Assed Determination of Cost 4 Marks
M/s. Versatile Limited purchased Machinery for ` 4,80,000 (inclusive of excise duty of ` 40,000). CENVAT Credit is available for
50% of the duty paid. The Company incurred the following other expenses for installation.
Particulars `
Cost of Preparation of Site for Installation 21,000
Total Labour Charges (200 out of the total of 600 men hours worked, were spent for installation of the machinery) 66,000
Spare Parts and Tools consumed in Installation 6,000
Total Salary of Supervisor (time spent for installation was 25% of the total time worked) 24,000
Total Administrative Expenses (1/10 relates to the Plant Installation) 32,000
Test Run and Experimental Production Expenses 23,000
Consultancy Charges to Architect for Plant Setup 9,000
Depreciation on Assets used for the installation 12,000
The Machine was ready for use on 15.01.2015 but was used from 01.02.2015. Due to this delay further expenses of ` 19,000
were incurred. Calculate the value at which the Plant should be capitalized in the books of M/s. Versatile Limited.
Solution:
Similar to Page No. B.7.5,Illus.No.17,18 [N 13] Also see Principles in Qn.16, 22, 23 of AS10
May 2015.17
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Particulars `
Purchase Price (` 4,80,000 less Excise Duty 40,000) 4,40,000
Add: Non Refundable Duties 50% of Excise Duty where CENVAT credit not available = 50% of ` 40,000 20,000
Site Preparation Cost 21,000
200
Labour Charges ` 66,000 22,000
600
Spares and Tools in Installation 6,000
Salary of Supervisor (24,000 25%) 6,000
Admin Expense attributable to Installation (apportioned costs are excluded) Nil
Test Run & Experimental production (Indirect Element) 23,000
Consultancy Charges to Architect for Plant setup 9,000
Depreciation on Asset used for Installation 12,000
Expenses due to delay in use (Excluded as it is abnormal) Nil
Total Capitalized Cost of Asset 5,59,000
May 2015.18
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Gurukripas Guideline Answers for May 2015 CA Inter (IPC) Group I Accounting
On and from 1.2.2014, he began drawings ` 385 per month for his Personal Expenses from the Cash Box of the business. His
account with the bank had the following entries:
Particulars Deposits Withdrawals
1.1.2014 1,65,000
1.1.2014 to 31.3.2014 1,22,650
1.4.2014 to 31.3.2015 1,26,500 1,48,500
The above withdrawals included payment by cheque of ` 1,10,000 and ` 33,000 respectively during the period from 1.1.2014 to
31.3.2014 and from 1.4.2014 to 31.3.2015 respectively for the purchase of Machineries for the business. The deposits after
1.1.2014 consisted wholly of sale price received from the customers by cheques.
Draw up Mr. Hs Statement of Affairs as at 31.3.2014 and 31.3.2015 respectively and work out his Profit or Loss for the year
ended 31.3.2015.
May 2015.19
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Gurukripas Guideline Answers for May 2015 CA Inter (IPC) Group I Accounting
May 2015.20
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Gurukripas Guideline Answers for May 2015 CA Inter (IPC) Group I Accounting
(b) On 1.1.2012, Beeta Ltd purchased a Machine from Yama Ltd on hire purchase basis. The terms of agreement provided for
40% as cash down payment and the balance in three instalment of ` 1,30,000 on 31.12.2012, ` 1,42,000 on 31.12.2014 and
`1,10,000 on 31.12.2015. The rate of interest charged by the vendor is 10% p.a. compounded annually. You are required to
calculate the Cash Price when 2nd instalment is payable after two years.
Solution: Case (a) Statement Showing the Computation of Cash Price and Periodic Interest
End of Balance due after Instalment Cumulative Interest at 10% Paid for
Instalment No. Instalment Amount Instalment p.a Principal
10
(1) (2) (3) (4) = (2) + (3) (5) = (4) (6) = (3) (5)
110
3 NIL 1,10,000 1,10,000 10,000 1,00,000
2 1,00,000 1,20,000 2,20,000 20,000 2,00,000
1 2,00,000 1,63,000 3,63,000 33,000 3,30,000
0 3,30,000 3,30,000 30,000 3,00,000
Case (b): Statement Showing the Computation of Cash Price and Periodic Interest
End of Balance due after Instalment Cumulative Interest at 10% Paid for
Instalment No. Instalment Amount Instalment p.a Principal
10
(1) (2) (3) (4) = (2) + (3) (5) = (4) (6) = (3) (5)
110
3 Nil 1,10,000 1,10,000 10,000 1,00,000
2 1,00,000 1,42,000 2,42,000 22,000 2,20,000
2,20,000 2,20,000 20,000 2,00,000
1 2,00,000 1,30,000 3,30,000 30,000 3,00,000
Let Cash Price be X. So, X = ` 3,00,000 + 40% of X
3,00,000
0.6 X = ` 3,00,000 So, X = = ` 5,00,000 Cash Price = ` 5,00,000
0.6
May 2015.21
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May 2015.22
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Gurukripas Guideline Answers for May 2015 CA Inter (IPC) Group I Accounting
Solution: Cost of Land = 5,00,000 + Legal Fees 25,000 + Title Insurance 10,000 + Net Cost of Demolition 50,000
less Salvage Value (10,000) = Total ` 5,75,000
2. Valuation: In the given case, the realizable value of all such investments on 31.3.2015 became ` 200 Lakhs i.e. ` 100
Lakhs each for Current Investment and Long Term Investment. The treatment is as under
Nature Long Term Temporary
Valuation Cost, adjusted for permanent decline in value, if any. Lower of Cost or Market Value
(a) Here, Y Limited lost a case of copyright which has drastically (a) Temporary Investments
reduced the realizable value of its Shares to one third. Losing the should be shown at
case of copyright may affect its business and performance. Realizable Value, i.e. ` 100
(b) So, it will be appropriate to reduce the Carrying Amount of Long Lakhs.
Accounting
Term Investment by ` 200 Lakhs and shown the Investments at (b) The reduction of ` 200
Treatment
` 100 Lakhs, considering the downfall in the value of Shares as Lakhs in the Carrying Value
decline other than temporary. of Current Investment will
(c) The reduction of ` 200 Lakhs in the Carrying Value of Long Term be debited in the Statement
Investment will be debited in the Statement of Profit & Loss. of Profit and Loss.
May 2015.23
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Gurukripas Guideline Answers for May 2015 CA Inter (IPC) Group I Accounting
STUDENTS NOTES
May 2015.24