Roll No………………

Time allowed : 3 hours Maximum marks : 100

Total number of questions : 8 Total number of printed pages : 4

Note: Answer SIX questions including Question No. 1 which is compulsory.

All working notes should be shown distinctly.
Marks
1. Explain any four of the following : 5 each
(i) Going concern concept (0)

(ii) Deferred revenue expenditure (0)

(iii Objectives of providing depreciation (0)

)
(iv) Account current (0)

(v) Self–balancing ledgers. (0)

2. (a) There are 450 members in a club each paying an annual subscription of Rs.500. Rs.5,000 4 (0)
were in arrears as on 31st March, 2003. Subscription received during the year ended 31st
March, 2004 were Rs.2,23,000 including Rs.4,500 for 2002–03 and Rs.7,500 for the year
2004–05. Calculate the amount of subscription in arrears as on 31st Mach, 2004 by
preparing subscription account.
(b) Distinguish between the following : 4 each
(i) ‘Trade bill’ and ‘accommodation bill’. (0)

(ii) ‘Operating lease’ and ‘financial lease’. (0)

(iii ‘Provision’ and ‘reserve’. (0)

)
3. The following is the trial balance of Arman as on 31st March, 2004: 16 (0)

Dr. Cr.
(Rs.) (Rs.)
Capital account — 8,00,000
Drawings account 60,000 —
Stock on 1st April, 2003 4,50,000 —
Purchases 26,00,000 —
Sales — 31,00,000
Furniture 1,00,000 —
Sundry debtors 4,00,000 —
Freight and octroi 46,000 —
Trade expenses 5,000 —
Salaries 55,000 —
Rent 24,000 —
Advertising expenses 50,000 —
Insurance premium 4,000 —
Commission — 13,000
 Discount 2,000 —
Bad debts 16,000 —
Provision for bad debts — 9,000
Creditors — 2,00,000
Cash in hand 52,000 —
Bank 58,000 —
Goodwill (at cost) 2,00,000 —
41,22,000 41,22,000
Adjustments:
(i) Stock on 31st March, 2004 was valued at Rs.5,30,000.
(ii) Salaries have been paid so far for 11 months only.
Unexpired insurance included in the figure of Rs.4,000 appearing in the trial balance is
(iii)
Rs.1,000.
(iv) Commission earned but not yet received amounting to Rs.1,220 is to be recorded in
books of account.
(v) Provision for bad debts is to be brought upto 3% of sundry debtors.
Manager is to be allowed a commission of 10% of net profits after charging such
(vi)
commission.
(vii) Furniture is depreciated @ 10% per annum.
(viii
Only one-forth of advertising expenses are to be written off.
)

Prepare trading and profit and loss account for the year ended 31st March, 2004 and balance
sheet as on that date.
4. (a) Bose purchased raw materials during the month of March, 2004 as stated below : 8 (0)

March 2 ….. 1,600 units @ Rs.60 per unit.

March 8 ….. 2,400 units @ Rs.55 per unit.
March 11 ….. 5,000 units @ Rs.57 per unit.
March 19 ….. 6,000 units @ Rs.54 per unit.
March 23 ….. 3,000 units @ Rs.58 per unit.
March 30 ….. 2,000 units @ Rs.63 per unit.
While preparing the final accounts on 31st March, 2004, Bose had 2,600 units of raw
materials in his godown You are required to calculate the value of closing stock of raw
materials according to —
(i) First–in–first–out method; and
(ii) Weighted average price method.
(b) What do you understand by ‘bank reconciliation statement’ ? Explain its utility as a 8 (0)
control tool.
5. (a) A trader does not keep proper books of account. However, he provides the following 8 (0)
information to you :
On 31 March,
On 31 March, 2004
2003
(Rs.)
(Rs.)
Cash at bank 4,500 4,000
 Cash in hand 300 3,000
Stock in trade 40,000 45,000
Debtor 12,000 20,000
Equipment 5,000 5,000
Creditor 30,000 20,000
Furniture 4,000 4,000
During the year ended 31st March, 2004, the trader introduced Rs.6,000, as additional
capital and withdrew Rs.4,000 for his personal use. Depreciation is to be provided on
furniture at 10% per annum and on equipment at 5% per annum.
Prepare a statement showing profit or loss made by him for the year ended 31st March,
2004.
(b) Delhi Trading Company opened a branch at Ghaziabad on 1st April, 2003. The goods 8 (0)
were sent by the head office to the branch at cost plus 25%. The following are the
particulars of the transactions relating to the branch for the accounting year ended 31st
March, 2004 :
Rs.
Goods sent to branch at invoice price 3,51,000
Sales:
Rs. 1,25,000
Cash 3,
Rs. 1,75,000
Credit 00,000
Cash collected from branch debtors 1,56,000
discount allowed to branch debtors 4,000
Cash sent to branch for:
Rs. 3,000
Wages
Rs. 11,000
Freight
Rs. 6, 000
Other expenses 20, 000
Spoiled goods written off at invoice price 500
Stock on 31st March, 2004 at invoice price 55,500

Prepare branch account showing profit earned or loss incurred during the year ended 31st
March, 2004. Also show memorandum branch debtors to ascertain closing balance of
branch debtors.
6. Nice Roadways purchased from Harish Motors 3 tempos costing Rs.1,00,000 each on hire 16 (0)
purchase basis on 1st April, 2002. 20% of the cost was to be paid down and balance in three
equal annual instalments together with interest @ 9% at the end of each year. Nice Roadways
paid the instalment due on 31st March, 2003, but could not pay instalments thereafter. Harish
Motors agreed to leave one tempo with the purchaser on 31st March, 2004, adjusting the value
of the other two tempos against the amount due on that date. The tempos recovered were
valued on the basis of 30% depreciation annually. Nice Roadways charges depreciation on
tempos @ 20% on diminishing balances method.

Harish Motors incurred Rs.10,000 on repairs of tempos repossessed and resold them at a profit
of 5% on total cost.
 Prepare the important ledger accounts in the books of both parties giving effect to the above-
mentioned transactions.
7. P, Q and R are partners sharing profits in the ratio of 5:3:2 respectively. On 31st March, 2004, 16 (0)
their balance sheet was as follows :
Liabilities Rs. Assets Rs.
23,00
0
Creditors 10,00
Cash 2,000
General reserve 0
Debtors 38,000
P’s capital 20,00
Stock 26,000
Q’s capital 0
Patent 6,000
R’s capital 16,00
0
3,000
72,000 72,000

Due to financial crisis, the firm was dissolved. The assets realised as follows :
Stock Rs.16,000; patent Rs.1,900; and debtors Rs.22,000. The creditors were paid less
discount amounting to Rs.2,100. The expenses of dissolution were Rs.2,000. R became
insolvent and only Rs.120 were recovered from him.
Prepare ledger accounts following the Garner vs. Murray Rule.
8. (a) 1,000 Bicycles were consigned by Sen & Co. of Kolkata to Tilak Ratna of Sri Lanka at an 8 (0)
invoice cost of Rs.950 each. Sen & Co. paid freight Rs.65,000 and insurance Rs.11,500.
During the voyage 100 bicycles were totally damaged by fire and had to be thrown
overboard. Tilak Ratna took delivery of the remaining bicycles and paid Rs.86,400 for
customs duty. Tilak Ratna sent a bank draft to Sen & Co. for Rs.3,20,000 as advance
payment and later sent an account sales showing that 800 bicycles had been sold at
Rs.1,400 each. Amount spent by Tilak Ratna on godown rent and advertisement totalled
Rs.12,500. The consignee is entitled to a commission of 5%. Prepare the consignment
account, on account of Tilak Ratna and abnormal loss account in the books of Sen & Co.,
assuming that nothing was recovered from the insurers due to a defect in the policy.
(b) On 1st April, 2001, Zora Ltd. purchased machines for Rs.1,20,000 and on 30th 8 (0)
September, 2002 it acquired additional machines at a cost of Rs.20,000. On 30th June,
2003, one of the original machines which cost Rs.5,000 was found to have become
obsolete and was sold as a scrap for Rs.500. It was replaced on the same date by a new
machine costing Rs.8,000. Depreciation is to be provided @ 15% per annum on the basis
of diminishing balance method. Show machinery account for the first three years. The
company closes its books on 31st March every year.