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GROUP-I ACCOUNTING
1. The following items appear in the Trail Balance of BHARAT Ltd. as at 31st March 2012:
Rs.
1. Revenue from Operations 24,00,000
2. Other Income 1,00,000
3. Expenses other than Interest 3,80,000
st
4. General Reserve (as on 1 April 2011) 1,30,000
5. Profit and Loss Account (as on 1.4.2011) RS. 3,28,000. The recommendation of
the companys Board of Directors include equity dividend of 15% (Including
Interim Dividend of Rs. 80,000). Transfer Debenture Redemption Reserve @
50% of Debentures. Transfer to general reserve at 15%.
(assume corporate tax 30% & corporate dividend tax at 20%)
6. 12%, 10,000 Debentures of Rs. 100 each fully paid up
7. 14%, 5,000 Preference Shares of Rs. 100 each fully paid up
8. 6,000 Equity Shares of Rs. 100 each
9. 8,000 Equity Shares Rs. 100 each, Rs 25 paid up
Required: Show the above items in Profit and Loss Statement and Balance Sheet
Required: Show the above items in Profit and Loss Statement and Balance Sheet
2. Provisional balance sheet of P Ltd as at 31st March 2014 was as under:
Liabilities Rs. Assets Rs.
Share Capital Fixed assets (at 7,00,000
cost less
depreciation)
50,000 equity 3,50,000 Cash and bank 2,00,000
shares of Rs.10 balances
each, Rs.7 per
share called up
Less: Calls in (20,000) Other current 6,00,000
arrear on 10,000 assets
shares at Rs.2 per
share
3,30,000
Add:Calls in 1,20,000 4,50,000
advance on 40,000
3. On 31st March, 2015 Bose and Sen Ltd provides to you the following ledger balances after
preparing its Profit and Loss account for the year ended 31-03-2015
Credit balances
Particulars Rs
Equity share capital, fully paid shares of Rs.10 70,00,000
each
General Reserve 15,49,100
Loan from State Finance Corporation 10,50,000
(Secured by hypothecation of Plant and
Machinery repayable within one year
Rs.2,00,000)
Loans Unsecured (Long term) 8,47,000
Sundry creditors for goods and expenses 14,00,000
(Payable within 6 months)
Profit and Loss account 7,00,000
Provision for tax 3,25,500
Proposed dividend 4,20,000
Provision for dividend distribution tax 71400
133,63,000
Debit balances
You are required to give previous year figures and prepare the Balance Sheet as per Schedule III.
4. Sumedha Ltd took a loan from bank for Rs.10,00,000 to be settled within 5 years in 10 half yearly
instalments with interest.First instalment is due on 30.09.2013 of Rs.1,00,000.Determine how the loan
will be classified in the preparation of Financial Statements of Sumedha Ltd. for the year ended 31 st
March 2013 according to Schedule III of the Companies Act, 2013.
BONUS ISSUE
Liabilities Rs Assets Rs
Authorised Share Capital: Fixed Assets 20,00,000
2,00,000 Equity shares of Rs 10 20,00,000 Investments 4,40,000
each Current Assets 5,60,000
Issued and subscribed share
capital 14,00,000
2,00,000 Equity shares of Rs 10
each, Rs 7 paid up
Reserves and Surplus:
Capital reserve (profit on sale of 1,30,000
Assets)
Securities Premium 90,000
(includes Rs 20000 received
otherwise than in cash)
General reserve 2,40,000
P/L A/c 5,20,000
12 percent debentures are convertible in to equity shares of Rs 10 each fully paid on June 01,2011
.Necessary resolutions were passed and requisite legal requirements were complied with. For issue of
bonus shares it was decided that reserves and surplus, other than P&L a/c should be first capitalised.
Required: Prepare Balance Sheet as on May 15,2011 , date on which all the formalities related to the
issue of bonus shares completed. For the purpose of preparation of Balance Sheet assume that,
Balance Sheet items as on Mar 31,2011 which are not affected by issue of bonus shares as above,
remains unchanged as on May 15,2011. Also pass necessary journal entries in the books of the
company related issue of bonus shares, for the period from Apr 01,2011 to May 15,2011.
2. The paid up capital of Sunshine Ltd. is Rs. 10,00,000 consisting of 60,000 equity shares of
Rs.10 each fully paid up and 50,000 equity shares of Rs.10 each , Rs. 8 paid up .
It has Rs.40,000 in Securities Premium account ,Rs. 2,00,000 in Profit and Loss account (Cr.)
Rs. 3,00,000 in General Reserve and Rs. 60,000 in Capital Redemption Reserve account.
By way of bonus dividend the partly paid shares are converted into fully paid up shares and
the holders of fully paid shares are also allotted fully paid up bonus shares in the same ratio.
Pass journal entries showing separately the two types of bonus issues stated above. It is
desired that there would be minimum reduction in free reserves.
DIVIDEND
1. Due to inadequacy of profits during the year ended 31st March,2015, XYZ Limited proposes
to declare 10% dividend out of general reserves. From the following particulars, ascertain the
amount that can be utilized from general reserves, according to the Companies(Declaration of
dividend out of Reserves) Rules, 2014:
Particulars Rs.
17,500 9% Preference shares of Rs.100 17,50,000
each, fully paid
8,00,000 equity shares of Rs.10 each, fully 80,00,000
paid
General Reserves as on 1.4.2014 25,00,000
Capital Reserves as on 1.04.2014 3,00,000
Revaluation Reserves as on 1.04.2014 3,50,000
Net profit for the year ended 31st March 3,00,000
2015
Average rate of dividend during last 3 years has been 12%
Liabilities Rs.
Authorised Capital:
20,000, 14% preference shares of Rs.100 20,00,000
2,00,000 equity shares of Rs.100 each 200,00,000
2,20,00,000
Issued and Subscribed Capital:
15,000, 14% preference shares of Rs.100 15,00,000
each fully paid
1,20,000 equity shares of Rs.100 each, 96,00,000
Rs.80 paid up
Share Suspense a/c 20,00,000
Reserves and Surplus
Capital Reserves (Rs.1,50,000 is 1,95,000
revaluation reserve)
Securities Premium 50,000
Secured Loans
15% Debentures 65,00,000
Unsecured Loans:
Public Deposits 3,70,000
Cash credit loan from SBI (Short term) 4,65,000
Current Liabilities
Trade Payables 3,45,000
Assets:
Investment in shares, debentures etc. 75,00,000
Profit and Loss account 15,25,000
Share suspense account represents application money received on shares, the allotment of
which is not yet made.
You are required to compute effective capital as per provisions of Schedule V. Would
your answer differ if X Ltd is an investment company?
Depreciation on fixed assets as per Schedule II of the Companies Act, 2013 was 67,000.You
are required to calculate the maximum limits of the managerial remuneration as per
Companies Act, 2013.
1. The Balance Sheets of Z Ltd. as on 31st March, 2012 and 2013 are given below:
Liabilities 31.03.2012 31.03.2013 Assets 31.03.2012 31.03.2013
(i) Sold one machine for Rs.25,000 the cost of which was Rs.50,000 and the depreciation
provided on it was Rs.21,000.
(iv) Sold some Trade Investments at a profit which was credited to Capital Reserve.
(v) Decided to value stock at cost where as previously the practice was to value stock at cost
less 10%. The stock according to books on 31.3.2012 was Rs.54,000. The stock on
31.3.2013 was correctly valued at Cost Rs.75,000.
(vi) Decided to write off Fixed Assets costing Rs. 14,000 (depreciated).
2. From the following balance sheet and information, prepare Cash Flow Statement of Ryan Ltd.
for the year ended 31st March,2013
Balance Sheets
a. A piece of land has been sold out for Rs.1,50,000 (Cost :Rs.1,20,000) and the balance land
was revalued. Capital Reserve consisted of profit on sale and profit on revaluation
b. On 1st April 2012 a plant was sold for Rs.90,000 (Original Cost Rs.70,000 and W.D.V
Rs.50,000) and debentures worth Rs.1,00,000 was issued at par as part consideration for plant
of Rs. 4.5 lakhs acquired.
g. Income tax liability for the current year was estimated at Rs.1,35,000
h. Depreciation at 15% has been written off from Plant account but no depreciation has been
charged on Land and Building a/c
3. Given below is the Statement of Profit and Loss of ABC Ltd. and the relevant Balance Sheet
information:
Statement Of Profit and Loss of ABC Ltd for the year ended 31st December, 2013
Securities Goodwill
Premium 40,000 30,000 Current - 30,000
Capital Assets 9,10,000 11,41,000
Redemption
Reserve NIL 1,00,000 Short term 50,000 84,000
investments
General Reserve 2,00,000 1,20,000
( less than 2
P&L account 1,30,000 1,75,000 months)
Additional information:
i. Preference share capital was redeemed at a premium of 10% partly out of proceeds issue of
10,000 equity shares of Rs.10, each issued at 10% premium and partly out of profits
otherwise available for dividends.
ii. The company purchased plant and machinery for Rs. 95,000.It also acquired another company
stock Rs. 25,000 and plant and machinery Rs. 1,05,000 and paid Rs. 1,60,000 in equity share
capital for the acquisition.
iii. Foreign exchange loss of Rs. 1600 represents loss in value of short term investment.
Other information:
i. Y Ltd takes over X Ltd on 10th April, 2011
ii. Debentureholders of X Ltd are discharged by Y Ltd at 10% premium by issuing 15%
own debentures of Y Ltd.
iii. 14% Preference shareholders of X Ltd are discharged at a premium of 20% by issuing
necessary number of 15% preference shares of Y Ltd.(Face value Rs. 100 each)
iv. Intrinsic Value per share of X Ltd is Rs.20 and that of Y Ltd Rs.30.Y Ltd will issue
equity shares to satisfy the equity shareholders of X Ltd. on the basis of intrinsic
value.
2. P Ltd. acquires the business of V Ltd. whose Balance Sheet as at 31st March 2012 was as
under:
Liabilities Rs Assets Rs
6% Preference Share Capital (Rs 4,00,000 Goodwill 2,00,000
100) 8,00,000 Tangible Fixed Assets 10,50,000
Equity Share Capital (Rs 100) 78,400 Stock 1,50,000
Statutory Reserves 71,600 Book Debts 1,55,000
Profit & Loss A/c 2,00,000 Bills Receivable 25,000
6% Debentures 12,000 Cash at Bank 70,000
Interest outstanding on above Underwriting Commission 40,000
Workmens compensation Reserve 8,000
(Expected liability Rs 5,000)
1,00,000
Trade Creditors
20,000
Bills Payable
16,90,000 16,90,000
(Rs. In 000s)
Liabilities X Ltd Y Ltd Assets X Ltd Y Ltd
Equity share 5000 3000 Land and 2500 1550
capital (Rs.10 building
each)
14% 2200 1700 Plant and 3250 1700
Preference Machinery
share
capital(Rs.100
each)
General 500 250 Furniture and 575 350
Reserve Fittings
Export profit 300 200 Investments 700 500
reserve
Investment 100 Inventory 1250 950
allowance
reserve
Profit and 750 500 Trade 900 1030
Loss receivables
13% 500 350 Cash and 725 520
Debentures(Rs bank
.100 each)
Trade 450 350
creditors
Other current 200 150
liabilities
9900 6600 9900 6600
X Ltd takes over Y Ltd. on 1st April 2012.X Ltd discharges the purchase consideration as
below:
i. Issued 3,50,000 equity shares of Rs.10 each at par to the equity shareholders of Y
Ltd.
ii. Issued 15% preference shares of Rs.100 each to discharge the preference shareholders
of Y Ltd at 10% premium
The debentures of Y Ltd will be converted into equivalent number of debentures of X Ltd.
Show the balance sheet of X Ltd after amalgamation on the assumption that:
4. The following is the summarised Balance Sheets of A Ltd and B Ltd as on 31.3.2012
(Rs. In thousands)
Particulars A Ltd B Ltd
Liabilities
Share Capital
Equity shares of Rs.100 each 2000 1000
fully paid
Reserves 800 ----
10% Debentures 500 ----
Loan from banks 250 450
Bank Overdraft ---- 50
Trade payables 300 300
Proposed dividend 200 ----
Total 4050 1800
Assets
Tangible assets/fixed assets 2700 850
Investments 700 ----
Trade receivables 400 150
Cash at bank 250 ---
Accumulated losses --- 800
Total 4050 1800
B Ltd has acquired the business of A Ltd.The following scheme of merger was approved.
Pass necessary entries in the books of B Ltd. and prepare balance sheet after merger.
6. Given below is the balance sheet of X ltd. as at 31st March 2012 at which date the Company
was taken over by T Ltd.
Liabilities Rs Assets Rs
12% Pref. Shares of Rs 100 each 1,00,000 Land & Building 2,00,000
Terms of Absorption:
a) X Ltd. is to declare and pay dividend @ 12% on shares prior to absorption.
b) The value of Land & Building to be increase by Rs 50,000, Stock to be increased to Rs
2,20,000 and Debtors at their book value subject to an allowance of 5% to cover doubtful
debts, Goodwill to be valued at Rs 7,500.
Liabilities Rs Assets Rs
Share Capital Fixed Assets
30,000 Equity Shares (Rs 10 3,00,000 Trade Marks and Patents 1,10,000
each)
Goodwill at cost 36,100
40,000 8% Cumulative 4,00,000
Freehold Land 1,20,000
Preference Shares (Rs 10
each) Freehold Premises 2,44,000
Reserves and Surplus Plant and Equipment 3,20,000
10,000
Securities Premium Account Investment (Market to Market) 64,000
(1,38,400)
Profit & Loss Account Current Assets
Secured Borrowings: Inventories:
9% Debentures (Rs 100) Raw materials and packing
1,20,000 Materials
Accrued Interest 60,000
1,25,400
5,400 Finish goods
76,000
Current Liabilities 16,000
1,20,000 1,20,000
Creditors Trade receivable
50,000
Deferred Vat Payable
2,23,100
Temporary Bank Overdraft
10,90,100 10,90,100
Note: Preference Dividends are in arrears for 4 years.
2. Green Limited had decided to reconstruct the Balance Sheet since it has accumulated huge
losses. The following is the Balance Sheet of the Company on 31.3.2012 before
reconstruction:
Balance Sheet of Green Limited as at 31.3.2012
Liabilities Rs Assets Rs
Share Capital: Fixed Assets:
Authorized: Goodwill 20,00,000
1,50,000 Equity Shares of Rs. 50 75,00,000 Building 10,00,000
each
Plant 10,00,000
Subscribed 50,000 Equity Shares
of Rs. 50 each 25,00,000 Computers 25,00,000
1,00,000 Equity Shares of Rs. 50 Investments Nil
each, Rs. 40 per share paid up 40,00,000 Current Assets Nil
Secured Loans: Profit and Loss A/c (Loss) 20,00,000
12% First Debentures 5,00,000
12% Second Debentures 10,00,000
Current Liabilities:
Sundry Creditors 5,00,000
85,00,000 85,00,000
Mr. X Mr. Y
Rs Rs
12% First Debentures 3,00,000 2,00,000
12% Second Debentures 7,00,000 3,00,000
Sundry Creditors 2,00,000 1,00,000
12,00,000 6,00,000
Fully paid up Rs. 50 shares 3,00,000 2,00,000
Parly paid shares (Rs. 40 paid up) 5,00,000 5,00,000
The following Scheme of Reconstruction is approved by all parties interested and also by the Court:
(a) Uncalled capital is to be called up in full and such shares and the other fully paid up shares be
converted into equity shares of Rs. 20 each.
(b) Mr. X is to cancel Rs. 7,00,000 of his total debt (other than share amount) and to pay Rs. 2
lakhs to the company and to receive new 14% First Debentures for the balance amount.
(c) Mr. Y is to cancel Rs. 3,00,000 of his total debt (other than equity shares) and to accept new
14% First Debentures for the balance.
(d) The amount thus rendered available by the scheme shall be utilized in writing off of
Goodwill, Profit and Loss A/c Loss and the balance to write off the value of computers.
Required: Pass the Journal Entries and prepare the Balance Sheet of the reconstructed company.
3. The following is the balance sheet of CSJHB Ltd. as at 31st March, 2012:
Liabilities Rs Assets Rs
Share Capital: Fixed Assets:
Authorized: Pune Property 1,60,000
30,000 Equity Shares of Rs 10 3,00,000 Bombay Property 1,20,000
each
Plant and Machinery 1,50,000
30,000 13% Pref. Shares of Rs 10 3,00,000
Investments:
each
6,00,000 10% Government loan earmarked
Secured loans:
12% A Debentures secured
On Pune Property 30,000
12% B Debentures secured
on Bombay Property 35,000 65,000
5,00,000 5,00,000
The following scheme of reconstruction was duly approved:
(a) Equity shares were to be reduced to Re. 1 each.
(b) Preference shares were to be reduced by Rs 2 per share.
(c) Debenture holders were to forgo their unpaid interest Rs 5,200 which is included in sundry
creditors.
(d) B Debenture holders agreed to take over the Bombay property at Rs 50,000 and paid the
balance amount due from them in cash.
(e) Workmens compensation fund (Bombay) disclosed the fact that actually there was a liability
of Rs 2,000 only. As a result the relevant fund amount balance was to be brought down to the
required amount. Investments were realized at 10% above the book value.
(f) The Plant and Machinery were to be written down by Rs 90,000.
(g) Any balance remaining was to be applied as to 75% in writing down Pune property and 25%
transferred to capital reserve.
Required: Pass the necessary journal entries and prepare the Balance Sheet after reconstruction.
1. Following is the Receipts and Payments accounts for the year ended 31st March 2011
Receipts Rs Payments Rs
To Balance as per pass 8230 By honorarium of 4800
book secretary
To Cash overspent 20 By printing and 470
stationery
By balance as per pass 3480
book
Unpresentedcheques being payment on printing on 01.04.2010 Rs. 90 and on 31.03.2011 Rs.30
Cash overspent represents amount of honorarium to the treasurer not drawn due to shortage of fund.
But the total salary payable to him for the year was already included in Rs.4800.
Required:
How will you show the above items in final accounts of a club for the year ended 31st March,2011
2. How will you deal with the following items in the final accounts of a club for the year ended
31st March 2011
c) A sum of Rs.20,000 received in October 2010 as entrance donation from an applicant was to be
refunded as he had not fulfilled the requisite membership qualifications.The refund was made on
03.06.2011
5. How will you deal with the following items while preparing the Income and Expenditure a/c
for the year ending on 31st March, 2011 and balance sheet as on that date
Particulars As at 1.04.2010 As at 31.03.2011
Amount due to Suppliers of 15000 9750
Sports material
During 2010-2011 the payment made to suppliers of sports materials was Rs.44,000.Cash
purchases amounted to 20% of total purchases.
6. How will you treat the following items in the final accounts of a club?
a. Payment for new car(less sale proceeds of old car Rs.6000 as on 1.4.2010) Rs.25,200
b. Car (as on 1.4.2010) Rs.24,380
c. Depreciation on car(as on 1.04.2010) Rs.20,580
d. Rate of depreciation on car at 15% p.a for whole year
Expenditure Rs Income Rs
30,100 30,100
Receipts Rs Payments Rs
34,200 34,200
The assets on 1 January, 20X2 included Club Grounds & Pavilion Rs 44,000, Sports Equipments Rs
25,000 and Furniture and Fixtures Rs 4,000. Subscriptions in arrear on that date were Rs 800.
Subscriptions received in advance on that date were Rs 200. Creditors for Printing & Stationery on
that date were Rs 500.
Requirements: Prepare the Balance sheet as at 1.1.20X2 and 31.12.20X2.
Expenditure Rs Income Rs
38,300 38,300
9. Prepare Income and Expenditure Account and Balance Sheet of Tulsian Sports Club, Delhi
from the following Information:
Receipts and Payments Account of Tulsian Sports Club, Delhi
for the year ending on 31st March, 2012
23,466 23,466
Accounting policies followed by Tulsian Sports Club, Delhi are, provide as under:
(a) The sports equipments and furniture are to be depreciated @ 25% and 19% p.a. respectively.
(b) One half of the entrance fees and life membership fee are to be treated as income.
SINGLE ENTRY
a. Some bills were endorsed in favour of creditors .Out of these endorsed bills, bills for Rs.25,000
were dishonoured.
b. Bills amounting to Rs.25,000 were discounted at a discount of 2% of which a bill for Rs. 12,500
was dishonoured
c. Out of these dishonoured bills, drawees of bills of Rs.18750 became insolvent and paid 50% only
by means of a bank draft.
d. Bills amounting to Rs.10,000 were discharged by drawees before maturity at a rebate of 2% by
means of bank draft
e. Bills amounting to Rs.10,000 were collected at maturity by means of bank draft.
Prepare bills receivable account
2. Calculate cash sales, gross credit sales, cash purchases and gross credit purchases from the
following information:
Expenses 1,75,000
(c) Sales are affected so as to realize a gross profit of 33-1/3% on the sale proceeds.
(e) During the year, Bills Receivable were drawn on debtors. Of these, Bills amounting to Rs 20,000
were endorsed in favour of creditors. Of this later amount, a bill for Rs 4,000 was dishonored by
the debtor.
(f) Capital introduced during the year by the proprietor by cheques was omitted to be recorded in Cash
Book, though the Bank balance of Rs 4,750 on 31st March, 2012 (as shown above), takes the same
into account.
Capital 50,000
Deposits from customers of Inland Transport Ltd. 10,000
Deposits from general public 10,000
Interest due for half year on above 500
Auditors 1,500
Advertising 1,000
Rates and taxes 500
Fixtures and fittings 20,000
Motor car 18,000
Debtors for Rail Tickets 5,000
Debtors for Air Tickets 2,000
Rent paid in Advance 1,250
Bank Balance 27,250
73,500 73,500
Particulars Particulars
Rs Rs
(b) Weekly expenditure defrayed from cash receipts before banking: Staff Wages Rs 1,100, Petty
Expenses Rs 50
In addition to the above, the owner has drawn Rs 650 per month to meet personal expenses
and spent Rs 350 per month for maintenance of a car in the interest of the agency, out of the
cash receipts before banking:
(d) Customers deposits on 31st Dec., 2012 were for Inland Transport Ltd. Rs 8,000
(e) Debtors for air and rail tickets on 31st Dec., 2012 were Rs 2,500 and 800 respectively.
(f) Depreciation on car and fixtures is allowed at the rate of 20% and 10% of the last years
balance respectively.
(g) Owner agrees to treat the cash differences, if any as his drawings.
Required: Draw a Profit and Loss Account showing commission earned for each class of tickets sold
for the year ending 31st Dec., 2012 and a Balance Sheet as at the date.
5. The following is the Balance Sheet of Sri CAMHG as on 31st March, 2011:
Liabilities Rs Assets Rs
1,88,000 1,88,000
A riot occurred on the night of 31st March, 2012 in which all books and records were lost. The cashier
had absconded with the available cash. He gives you the following information.
(a) His sales for the year ended 31st March, 2012 were 20% higher than the previous years. He
always sells his goods at cost plus 25%; 20% of the total sales for the year ended 31st March,
2012 were for cash. There were no cash purchases.
(b) On 1st April, 2011, the stock level was raised to Rs 60,000 and stock was maintained at this
new level all throughout the year.
(c) Collection from debtors amounted to Rs 2,80,000 of which Rs 70,000 was received in cash.
Business expenses amounted to Rs 40,000 of which Rs 10,000 was outstanding on 31st
March, 2012 and Rs 12,000 was paid by cheques.
(d) Analysis of the Pass Book revealed the Payment to Creditors Rs 2,75,000, Personal Drawings
Rs 15,000, Cash deposited in Bank Rs 1,43,000, Cash withdrawn from Bank Rs 24,000.
(e) Gross profit as per last years audited accounts was Rs 60,000.
(f) Provide depreciation on Building and Furniture at 5% and Motor Car at 20%.
(g) The amount defalcated by the cashier may be treated as recoverable from him.
1. On 1st May, 2012 Sumedha purchased 5000, 13.5% convertible debentures in X Ltd of face
value of Rs.100 each at 105 ex-interest. Interest on debentures is payable each year on 31st
March and 30th September. The accounting year is the calendar year. The following other
transactions were entered into during 2012:
Date Particulars
August 1st Purchased Rs.2,50,000 debentures at Rs.107
cum interest
October 1st Sale of Rs.2,00,000 debentures at Rs.103
Dec.31st Receipt of 10,000 equity shares in X Ltd. of
Rs.10 each on conversion of 20% of the
debentures held.Further it also received
interest on debentures converted in cash at the
time of conversion.
The market price of a debenture and an equity share in X Ltd as on 31st Dec, 2012 was Rs.106
and Rs.15.
Sumedha held the debentures as current assets.You are required to prepare debenture
investment account in the books of Sumedha on Average Cost Basis.
2. On 1st Apr 2009 XY Ltd has 15000 equity shares of ABC Ltd at a value of 15 per share(face
value Rs 10 per share) . On 1st June2009, XY ltd acquired 5000 equity shares of ABC Ltd .Rs
1,00,000 on cum right basis. ABC Ltd announced a bonus and right issue.
a) Bonus was declared , at the rate of 1 equity share for every 5 shares held, on 1stjuly 2009
b) Right shares are to be issued to the existing shareholders on 1stsep 2009. The company
will issue one right share for every 6 shares at 20% premium. No dividend was payable
on these shares.
c) Dividend for the year ended 31.3.2009 were declared by ABC LTD @ 20% which was
received by XY LTD on 31.10 2009
XY Ltd
Took up half the right issue
Sold the remaining rights for Rs 8 per share
Sold half of its share holdings on 1st Jan 2010 at rs 16.5 per share .Brokerage being 1%
You are required to prepare investment account of XY ltd. For the year ended 31 st mar
2010 assuming the shares are being valued at average cost .
3. Mr.M purchased on 1st March, 20X1 Rs 24,000 5% Bharat Debenture Stock @ 90 cum-
interest, interest being payable on 31st March and 30th September each year. Stamp and
expenses on purchase amounted to Rs 20 and brokerage @ 2% was charged on cost; interest
for the half-year was received on the due date. On 1st September Rs 10,000 of the stock was
sold @ 92 ex-interest less brokerage @ 2%. On 30th September Rs 8,000 stock was
purchased @ 91 ex-interest plus brokerage @ 2% and charges Rs 10. On 1st December, Rs
6,000 stock was sold @ 94 cum interest less brokerage @ 2%. The market price of stock on
31st December was 88.5%. Show the Investment Account for the year ending on 31st
1. From the following information, compute the amount of claim under loss of Stock
Policy:
Sum Insured Rs 6,000 Stock as on 1.1.2011 Rs 90,000
Accounting Year Calendar Year Sock as on 31.12.2011 Rs 70,000
Reason for Damage on 30-6-2012 Purchases during 2011 Rs 4,00,000
Due to fire accident
Sales during 2011 Rs 6,00,000
Value of Salvaged Stock Rs 5,000
Purchases from 1.1.2012 to 30.6.2012
G.P. Ratio Uniform from year to year Rs 6,00,000
Sales from on 1.1.2012 to 30.6.2012
Rs 8,80,000
You are informed that in 2012, the cost of purchases and selling prices have increased by 20% and
10% respectively above the levels prevailing in 2011.
2. Calculate the net claim for the increased cost of working from the following information:
Agreed G.P ratio 20%, net profit for the last accounting year Rs.2,40,000, Standing charges (out of
which Rs.80,000 have not been insured) Rs.5,60,000, actual turnover during claim period
Rs.8,00,000.During the claim period, 50% of the total turnover of this period was maintained by
incurring the additional expenses amounting to Rs.1,50,000 and there was a saving in insured standing
charges of 6.25% and in uninsured standing charges of Rs.10,000.Turnover during 12 months
preceding the date of fire Rs.30,00,000.Agreed increase 20%.
3. A fire occurred in the premises of M/s Fireprone Co. on 30th May 2012. From the following
particulars, relating to the period from 1.1.2012, you are required to ascertain the amount of
claim to be filed with the insurance company for the loss of stock.
Particulars Amount
(Rs.)
The average rate of GP has been 20% in the past. The selling price has been increased by 20% with
effect from 1.1.2012.
For valuing the stocks for the balance sheet as at 31st Dec.2011, Rs.1000 had been written off in
respect to a slow moving item, the cost of which was Rs.5000.A portion of these goods was sold at a
loss of Rs.500 on the original cost of Rs.2500.The reminder of the stock was now estimated to be
worth the original cost.
Subject to the above exceptions, the gross profit had remained at the uniform rate throughout. The
value of goods salvaged was estimated at Rs.25,000.
The concern had taken an insurance policy for Rs.60,000 which was subject to average clause.
4. Sony Ltds Trading and profit and loss account for the year ended 31st December 2011 were
as follows:
Trading and Profit and Loss account for the year ended 31.12.2011
The company had taken out a fire policy for Rs.3,00,000 and a loss of profit policy for
Rs.1,00,000 having an indemnity period of 6 months.A fire occurred on 1.04.2012 at the
premises and the entire stock was gutted with nil salvage value. The net quarter sales i.e
1.04.2012 to 30.06.2012 was seriously affected. The following are the other information
The general trend of the industry shows an increase of sales by 15% and decrease in GP by
5% due to increased cost.
Ascertain the claim for loss of stock and loss of profit
HIRE PURCHASE
5. A Ltd purchases a plant on hire purchase basis for Rs.1,00,000(cash price Rs.86,000) and
makes the payment in the following order:
6. On 1.1.2011 Shaan Ltd purchased a machine on hire purchase basis.The terms of agreement
provided for 40% as cash down payment and the balance in three instalments of Rs. 1,63,000
on 31.12.2012, Rs.1,20,000 on 31.12.2013 and Rs.1,10,000 on 31.12.2014.The rate of interest
charged by vendor is 10% p.a compounded annually.
You are required to calculate the cash price and periodic interest charged hire vendor.
7. On 1.1.2011 Beeta Ltd. purchased a machine from Yama Ltd on hire purchase basis.The
terms of agreement provided for 40% cash down payment and the balance in three instalment
of Rs.1,30,000 on 31.12.2011, Rs.1,42,000 on 31.12.2013, and Rs.1,10,000 on
31.12.2014.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.
8. Shyam purchased from Rang Ltd a colour T.V set on 1st October, 2011 on hire purchase
system.The cash price of the T.V set was Rs.15,000.Term of payment were Rs.1150 down
payment and half yearly instalments of Rs.4000 each, over two years.The first instalment was
to be paid on 31st March, 2012.Rate of interest was 12% p.a.Shyam could not pay the second
instalment due on 30th September, 2012 as a consequence, Rang Ltd repossessed the T.V set
after fulfilling legal formalities. Prepare Shyams a/c. and Goods repossessed a/c in Rangs
books.Assume that the estimated value of T.V set at the time of repossession was Rs.12,000
and after an expenditure of Rs.850 on repairs and re-packing, the company re-sold it on 6th
December, 2012 for cash to one of its employees at a special discount of 10% of cash price i.e
for Rs.13,500.Rang closes its books of accounts every year on 31st March.
9. Computer point sells computers on HP basis at cost plus 25%.Terms of sales are Rs.10,000
down payment and eight monthly instalments of Rs.5000 for each computer.Two computers
were repossessed for non-payment of instalments and to be valued at 50% of cost price.
Compute the value of repossessed computers.
1. Ketan had accepted a bills payable to Mitesh, falling due on different dates. The details of
bills are as follows:
2. A had the following bills receivable and bills payable against B. Calculate average due date
when the payment can be made or received without any loss or gain of interest to either party.
BILLS RECEIVABLE BILLS PAYABLE
Gazetted holiday intervening in the period are 15th August 2013, 16th August 2013, and
th
6 September 2013.
3. The following are the transactions that took place between Geet and Hari during the period
from 1st October 2013 to 31st March 2014:
Draw up an account current upto 31st March 2014 to be rendered by Geet to Hari charging
interest at 10% per annum.
1. From the following information available from the books of a trader from 1-1-2011 to
31-03-2011, you are required to draw up the debtors ledger adjustment account in the
general ledger.
a. Total sales amounted to Rs.1,80,000 including the sale of old Xerox Machine for
Rs.4,800(Book value Rs.8000).The total cash sales were 80% less than the total credit
sales.
b. Collections from debtors amounted to 70% of the aggregate of the opening debtors
and credit sales for the period. Debtors were allowed a cash discount of Rs.20,000
c. Bills receivable drawn during the three months totalled Rs.30, 000 of which bills
amounting to Rs.10,000 were endorsed in favour of suppliers. Out of the endorsed
bills, one bill for Rs.6000 was dishonoured for non-payment as the party became
insolvent, his estate realized nothing.
d. Cheques received from customers Rs.8000 were dishonoured, a sum of Rs.2000 was
irrecoverable, bad debt written off in the earlier years realised Rs.11,000
e. Sundry debtors as on 1.1.2011 stood at Rs.50,000
2. Prepare the General Ledger Adjustment accounts as will appear in the debtors and
creditors ledger, from the information given below:
Balance as on 1.04.2011
Balance on 31.03.2012
Debtors Ledger (Cr.) Rs.380
Creditors Ledger (Dr.) Rs.420
3. Pass journal entries in the books of Exe Ltd both under self balancing and sectional
balancing system:
4. M/s Big Systematic Limited maintains self-balancing ledgers preparing control accounts
at the of each month.
On 3rd January 2013 the accountant of the company located the following errors in the
books of account:
i. An amount of Rs.8700 received from customer Mehra was credited to customer
Mehta another customer.
PARTNERSHIP ACCOUNTS
1. i) Anil and Mukeshan partners sharing profit and losses in the ratio of 3:2 .Govind is admitted
for 1/4th share of firm. Thereafter Madan enters for 20 paise in a rupee. Compute new profit
sharing ratios under both admission of partners
ii) The following goodwill a/c was opened by the partners R &S , on the admission of H as a
new partner into firm Om and sons .Calculate the share of profit agreed to be given to H
Goodwill A/c
Dr Cr
3. A & B are in partnership sharing profit and losses in the ratio of 3;2 .The capitals of A & B
are Rs 80000 and Rs 60000 respectively. They admit C as a partner who contributes Rs 35000
as capital for 1/5th share of profits to be acquired equally from both A &B.The capital
accounts of old partners are to be adjusted on the basis of the proportion of Cs capital to his
share in the business. Calculate the amount of actual cash to be paid off or brought in by the
old partners for the purpose and pass the necessary Journals.
4. X, Y & Z are partners sharing profits and losses in the ratio of 4:3:2 respectively. On Mar
2011 Y retires and X & Z decide to share profits and losses in the ratio of 5:3 .Then
immediately , W is admitted for 3/10th in profits , 2/3rd of which was given by X and rest was
taken by W from Z . Goodwill of the firm is valued at Rs 216000 W brings required amount
of goodwill.
Give necessary Journal entries to adjust goodwill on retirement of Y and admission of W if
they do not want to raise goodwill in the books of accounts.
Required: Prepare profit and Loss Appropriation Account for the year ended on 31st March, 2012.
6. X, Y and Z were in partnership sharing profits and losses as one-half, one fourth and one-
fourth respectively. It was agreed that interest should be allowed at the rate of 10% per
annum on partners capital accounts and charged at the rate of 8 per cent annum on their
drawings. No interest was to allowed or charged on current accounts.
The following are the particulars of their capital accounts, current accounts and drawings (as shown
by the draft accounts):
(a) The rent of Xs private house, amounting to Rs 1,500 and paid on 31st Dec 20X1 had been
included in rents charged in profit and loss Account.
(b) Repairs amounting to Rs 20,000 had been treated as addition to machinery, depreciation on
which had been charged at the rate of 20 per cent.
(c) The premium, amounting to Rs 6,000, on Ys Life Insurance Policy, and paid on 30th June
20X1 had been included as insurance charges in the Profit and Loss Account.
Z retired from the partnership on 31st December 20X1 and agreed to leave the amount due to him
from the firm as a loan repayable by agreed installments. X and Y agreed to continue in partnership,
sharing profits and losses as two-third and one-third. In ascertaining the amount due to Z from the
firm and for the purposes of the new partnership, it was agreed to make the following adjustments:
(1) Goodwill to be valued at Rs 1,44,000, but no account for goodwill to be raised n the books.
7. Jeet, Meet, and Reet were partners sharing profits and losses in the ratio of 2/5, 2/5 and 1/5.
On 1st Jan. 20X1 their Balance Sheet stood as follows:
Liabilities Rs Assets Rs
1,70,000 1,70,000
The firm had taken out a Joint Life Policy for Rs 1,00,000 the premiums on which were charged to the
Profit and Loss Accounts. On 1st July, 20X2 Reet died. His representatives agree that:
(a) Goodwill of the firm be valued at Rs 50,000; (b) Fixed assets be written down by Rs 10,000;
and (c) In lieu of profits, upto his death, Reet should be paid interest at the rate of 25% p.a. on
his capital as on 1st Jan. 20X1
The Policy money was received on December 31, 20X1 and Reets heirs were paid the total amount
due to them. The accounts reveal that the firm had made a profit of Rs 40,500 during the year after
writing off Rs 9,500 as depreciation on fixed assets (of which Rs 5,000 was up to 1st July. 20X1). At
the end of the year. The creditors had been reduced by Rs 5,000 and debtors by Rs 6,000 and stock
had increased by Rs 8,000 (as compared to the figures on 1st Jan, 20X1. The drawings of the partners
were;
Up to 1st July 20X1 After 1st July 20X1
Rs Rs
Jeet 4,125 5,000
Meet 4,125 5,000
Reet 1,750 -
Required: Prepare the Balance Sheet of the firm as on 31st Dec, 20X1 assuming that remaining
partners did not retain goodwill in their books.
8. E,F and G were partners sharing profits and losses in the ratio of 5:3:2 respectively.On 31st
March , 2009 Balance Sheet of the firm is as follows:
On 31st March, 2009 E decided to retire and F and G decided to continue as equal partnes.
Other terms of retirement were as follows:
AS
2. T Ltd which manufactures three products namely O, N and S using raw materials M1, M2 and
M3 respectively provides you the following information about the Closing stock at 31st ,March 2013
Calculate the value of closing stock of raw materials in the following conditions:
i. If finished product is sold at Rs.275 per unit what will be the value of closing stock of raw
material
ii. If finished product is sold at Rs.230 per unit what will be the value of closing stock of raw
material
4.
Particulars Kg Rs
Opening Stock - Finished goods 1000 25,000
- Raw materials 1100 11,000
Purchases 10,000 100,000
Labour 76,500
Overhead (Fixed) 75,000
Sales 10,000 280,000
Closing Stock - Raw materials 900
- Finished Goods 1200
The expected production for the year was 15000 kg.of the finished good products. Due to fall in the
market demand the sales price for the finished goods was Rs 20 per Kg and the replacement cost for
the raw material was Rs 9.5 kg on the closing day.
5. A company had 5000 units of stock A, costing at Rs.50 each on 31.03.2014.Out of this
stock, 3000 units are to be supplied under a firm contract at Rs.45 each. Show how the
valuation will be done of such stock when
-The selling price is Rs.49 each
-the selling price is Rs.52 each
AS-6
1. X Ltd set up a factory in the backward area and purchased plant for Rs. 500 lakhs for the purpose.
Purchases were entitled to Cenvat Credit of 2% and along with this Government agreed to extend
30% subsidy for backward area development. Estimated residual value at the end of the useful life
Rs.43 lakhs. Compute depreciable amount of the asset.
2. In the Trial Balance of M/s Sun Ltd .as on 31-3-2010. Balance of machinery appears at Rs. 5,60,000.
The company follows rate of depreciation on machinery @10% p.a. on WDV basis. On scrutiny it
was found that a machine appearing in the books on 1-4-2010 at Rs. 1,60,000 was disposed of on 30-
9-2010 at Rs. 1,35,000 in Part exchange of a new machine costing Rs. 1,50,000.
5. A machinery was purchased on 1.04.2011 for Rs 1,50,000 and useful life of the machine is estimated
to be 10 years.The net book value of the machinery on 1/04/2004 was Rs.1,05,000.The liability for
acquiring this machine was increased by Rs.14,000 due to price adjustments on 31/03/2005.What will
be the depreciation for the year 2004-05 onwards.
Assume depreciation has been provided on SLM.
AS-7
1. Gammon Ltd has undertaken bridge construction contract as per detail given below, bridge will be
constructed in 3 years
a. Initial contract revenue Rs.900 crores
b. Initial contract cost Rs.800 crores
(Rs. In crores)
(Rs. In crores)
Particulars I II III
Initial contract revenue 1000 1000 1000
Revenue increase due to escalation in II year - 200 -
Claim - - 100
Incentive payments - - 150
Penalties - 50 -
3. Induga Ltd undertook construction of subway for Rs100 crores on 1-01-2009.It estimated construction
cost initially at 70 crores. Contract was estimated to be completed in 3 years.However, when starting
the work it was found that there were rocks underground at construction site and cost shall increase by
Rs.36 crores and the contract shall be completed in three years. The company wants to provide for
expected loss of Rs 2 crores per year.
a. Is the treatment correct?
b. If work has not yet started but by technical survey it was known on 25/12/2009 that there
was rock underneath at construction site.Company did not want to provide for any losses
of Rs. 6 crores for the year ended 31-03-2010.Considering that when project work would
start, the losses shall be provided for.
AS -9
1. Y Ltd used certain resources of X Ltd. In return X Ltd receives Rs.10 lakhs and Rs.15 lakhs as
interest and royalties respectively, from Y Ltd. during the year 2007-2008.State on what basis X Ltd.
should recognize their revenue as per AS-9
2. On 25th September 2009, Planet Advertising Limited obtained advertisement rights to World Cup
Hockey Tournament to be held in Nov;/Dec 2009 for Rs 520 lakhs
They furnish the following information:
The company obtained the advertisements for 70% of available time for Rs. 700 lakhs by
30thSeptember , 2009
For the balance time they got bookings in October 2009 for Rs. 240 lakhs
All the advertisers paid the full amount at the time of booking the advertisements.
40% of the advertisements appeared before public in Nov 2009 and balance 60% appeared in Dec
2009.
You are required to calculate the profit/loss to be recognized for the month of Nov 2009 and
December 2009 as per Accounting Standard-9.
4. Victory Ltd. purchased goods on credit from Lucky Ltd.for Rs.250 Crores for export.The export order
was cancelled.Victory Ltd decided to sell the goods in the local market with a price discount.Lucky
Ltd.was requested to offer a price discount of 15%.The chief accountant of Lucky Ltd wants to adjust
the sales figure to the extent of the discount requested by Victory Ltd.Discuss whether the treatment is
justified.
AS-10
A company is in the process of setting up a production line for manufacturing a new product.Based
on trial runs conducted by the company, it was noticed that the production lines output was not of the
desired quality.However, company has taken a decision to manufacture and sell sub-standard product
over the next one year due to huge investment involved.
In the background of the relevant accounting standard, advise the company on the cut off date for
capitalisation.