Accounts Test 100 Marks PDF

ACCOUNTING
Total No. of Questions : 6 Total no. of Pages : 9

Time Allowed : 3 Hours Maximum Marks : 100
Question No. 1 is compulsory.

Answer any Four Questions out of remaining Five Questions.
Working notes should form part of answer.
Question 1 (4 * 5 = 20 Marks)
(a)
Rajkumar Ltd. began construction of a new building on 1st January, 2012. It obtained ₹ 1 lakh
special loan to finance the construction of the building on 1st January, 2012 at an interest rate
of 10%. The company’s other outstanding two non-specific loans were:
Amount Rate of Interest
₹ 5,00,000 11%
₹ 9,00,000 13%
The expenditures that were made on the building project were as follows :
Month Amount (in ₹)
January 2012 2,00,000
April 2012 2,50,000
July 2012 4,50,000
December 2012 1,20,000
Building was completed by 31st December, 2012. Following the principles prescribed in AS 16
‘Borrowing Cost’ calculate the amount of interest to be capitalized and pass one Journal Entry
for capitalizing the cost and borrowing cost in respect of the building.
(b)
ABC Ltd. is installing a new plant at its production facility. It has incurred these costs :
Cost of the plant (cost per supplier’s invoice plus taxes) ₹ 25,00,000
Initial delivery and handling costs ₹ 2,00,000
Cost of site preparation ₹ 6,00,000
Consultants used for advice on the acquisition of the plant ₹ 7,00,000
Interest charges paid to supplier of plant for deferred credit ₹ 2,00,000
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Estimated dismantling costs to be incurred after 7 years ₹ 3,00,000
Operating losses before commercial production ₹ 4,00,000
Please advise ABC Ltd. on the costs that can be capitalised in accordance with AS 10 (Revised).
(c)
Intelligent Ltd., a non-financial company has the following entries in its Bank Account. It has
sought your advice on the treatment of the same for preparing Cash Flow Statement.
1. Loans and Advances given to the following and interest earned on them :
a. to suppliers
b. to employees
c. to its subsidiaries companies
2. Investment made in subsidiary Smart Ltd. and dividend received
3. Dividend paid for the year
4. TDS on interest income earned on investments made
5. TDS on interest earned on advance given to suppliers
6. Insurance claim received against loss of fixed asset by fire
Discuss in the context of AS 3 Cash Flow Statement.
(d)
A business having the Head Office in Kolkata has a branch in UK. The following is the trial balance
of Head Office and Branch as at 31.03.2013 :
Account Name Dr. Cr.
Fixed Assets (Purchased on 01.04.2010) 5,000
Debtors 1,600
Opening Stock 400
Goods received from Head Office Account 6,100
(Recorded in HO books as ₹ 4,02,000)
Sales 20,000
Purchases 10,000
Wages 1,000
Salaries 1,200
Cash 3,200
Remittances to Head Office (Recorded in HO books as ₹ 1,91,000) 2,900
Head Office Account (Recorded in HO books as ₹ 4,90,000) 7,400

Creditors 4,000
• Closing stock at branch is £ 700 on 31.03.2013.
• Depreciation @ 10% p.a. is to be charged on fixed assets.
Prepare the trial balance after been converted in Indian Rupees.
Exchange rates of Pounds on different dates are as follows :
01.04.2010 – ₹ 61
01.04.2012 – ₹ 63
31.03.2013 – ₹ 67
Question 2
(a) (15 Marks)
The following is the Balance Sheet of Mr. Ram, a small trader as on 31.3.2008 :
Liabilities ₹ Assets ₹
Capital 4,00,000 Fixed Assets 2,90,000

Creditors 1,00,000 Stock 80,000
Debtors 1,00,000
Cash in Hand 10,000
Cash at Bank 20,000
5,00,000 5,00,000
A fire destroyed the accounting records as well as the closing cash of the trader on 31.3.2009.
However, the following information was available:
a. Debtors and creditors on 31.3.2009 showed an increase of 20% as compared to 31.3.2008.
b. Credit Period :
1. Debtors – 1 month
2. Creditors – 2 months
c. Stock was maintained at the same level throughout the year.
d. Cash sales constituted 20% of total sales.
e. All purchases were for credit only.
f. Current ratio as on 31.3.2009 was exactly 2.
g. Total expenses excluding depreciation for the year amounted to ₹ 5,00,000.
h. Depreciation was provided at 10% on the closing value of fixed assets.
i. Bank and cash transactions:
1. Payments to creditors included ₹ 1,00,000 by cash.
2. Receipts from debtors included ₹ 11,80,000 by way of cheques.
3. Cash deposited into the bank ₹ 2,40,000.
4. Personal drawings from bank ₹ 1,00,000.
5. Fixed assets purchased and paid by cheques ₹ 4,50,000.
You are required to prepare :
(a) The Trading and Profit & Loss Account of Mr. Ram for the year ended 31.3.2009 and
(b) A Balance Sheet on that date.
For your exercise, assume cash destroyed by fire is written off in the Profit and Loss Account.
(b) (5 Marks)
Following items appear in the Trial Balance of X Ltd. as at 31st March 2013 :
Authorised capital :
3,00,000 equity shares of ₹ 10 each 30,00,000
Issued and subscribed capital :
80,000 Equity Shares of ₹ 10 each, ₹ 7.50 paid up 6,00,000
1,20,000 Equity Shares of ₹ 10 each 12,00,000
Capital Redemption Reserve 2,60,000
Plant Revaluation Reserve 20,000
Securities Premium Account 1,20,000
General Reserve 2,00,000
Profit & Loss Account 1,00,000
Capital Reserve (including ₹ 50,000 being profit on sale of machinery) 1,50,000
Remaining balance of capital reserve is on account of non-cash items.
The company decided to convert the partly paid equity shares into fully paid shares by way of
bonus and to issue fully paid-up bonus shares to the holders of fully paid up shares in the same
ratio. You are required to pass journal entries assuming that there should be minimum reduction
in free reserves.
Question 3
(a) (10 Marks)
The Balance Sheet of X Ltd. as on 31st March, 20X3 is as follows:
₹
EQUITY AND LIABILITIES

1. Shareholders’ funds
a Share capital 2,90,000
b Reserves and Surplus 48,000

2. Current liabilities
Trade Payables 56,500
Total 3,94,500
ASSETS
1. Fixed Assets
Tangible asset 3,45,000
Non-current investments 18,500
2. Current Assets
Cash and cash equivalents (bank) 31,000
Total 3,94,500
The share capital of the company consists of ₹ 50 each equity shares of ₹ 2,25,000 and ₹ 100
each Preference shares of ₹ 65,000 (issued on 1.4.20X1). Reserves and Surplus comprises Profit
and Loss Account only.
In order to facilitate the redemption of preference shares at a premium of 10%, the Company
decided :
a. to sell all the investments for ₹ 15,000.
b. to finance part of redemption from company funds, subject to, leaving a bank balance of ₹
12,000.
c. to issue minimum equity share of ₹ 50 each at a premium of ₹ 10 per share to raise the
balance of funds required.
You are required to pass the necessary Journal Entries to record the above transactions.
(b) (10 Marks)

Department X sells goods to Department Y at a profit of 25% on cost and to Department Z at
10% profit on cost. Department Y sells goods to X and Z at a profit of 15% and 20% on sales,
respectively. Department Z charges 20% and 25% profit on cost to Department X and Y,
respectively.
Department Managers are entitled to 10% commission on net profit subject to unrealised profit on
departmental sales being eliminated. Departmental profits after charging Managers’ commission,
but before adjustment of unrealised profit are as under :
Department X 36,000
Department Y 27,000
Department Z 18,000
Stock lying at different departments at the end of the year are as under :

Dept. X Dept. Y Dept. Z
Transfer from Department X - 15,000 11,000
Transfer from Department Y 14,000 - 12,000
Transfer from Department Z 6,000 5,000 -
Find out the correct departmental Profits after charging Managers’ commission.
Question 4
(a) (10 Marks)
Rahul purchased from Shikha on 1 January 2019 5 machines, the cash price of which is ₹
10,00,000. 20% is paid immediately and the balance in 4 installments of ₹ 2,80,000, ₹
2,60,000, ₹ 2,40,000 and ₹ 2,20,000 starting from 31 December 2019. Vendor charges 10%
p.a. interest. Rahul writes off depreciation @ 20% p.a. on original cost. Rahul failed to pay the
installment on 31 December 2020 and Shikha agreed to leave 2 machines but repossessed other
3. She valued the machines considering 40% p.a. depreciation as per WDV. She sold these
machines at ₹ 70,000 each after spending 6000 ₹ On repair of each such machine. Books are
closed on 31st December each year.
Prepare relevant accounts in books of both parties.
(b) (10 Marks)

On 19th May, 2011, the premises of Shri Garib Das were destroyed by fire, but sufficient records
were saved, wherefrom the following particulars were ascertained:
Particulars ₹
Stock at cost on 1.1.2010 36,750

Stock at cost on 31.12.2010 39,800
Purchases less returns during 2010 1,99,000
Sales less returned during 2010 2,43,500
Purchases less returns during 1.1.2011 to 19.5.2011 81,000
Sales less returns during 1.1.2011 to 19.5.2011 1,15,600
In valuing the stock for the balance Sheet as at 31st December, 2010, ₹ 1,150 had been written
off on certain stock which was a poor selling line having the cost ₹ 3,450. A portion of these
goods were sold in March, 2011 at a loss of ₹ 125 on original cost of ₹ 1,725. The remainder of
this stock was now estimated to be worth the original cost. Subject to the above exceptions,
gross profit has remained at a uniform rate throughout. The stock salvaged was ₹ 2,900.

Show the amount of the claim of stock destroyed by fire. Memorandum Trading Account to be
prepared for the period from 1-1-2011 to 19-5-2011 for normal and abnormal items.
Question 5
(a) (10 Marks)
Mr. Sanjay furnishes the following details relating to his holding in 8% Debentures (₹ 100 each) of
P Ltd., held as Current assets :
1.4.2012 Opening balance – Face value ₹ 1,20,000, Cost ₹ 1,18,000
1.7.2012 100 Debentures purchased ex-interest at ₹ 98
1.10.2012 Sold 200 Debentures ex-interest at ₹ 100
1.1.2013 Purchased 50 Debentures at ₹ 98 cum-interest
1.2.2013 Sold 200 Debentures ex-interest at ₹ 99
Due dates of interest are 30th September and 31st March.
Mr. Sanjay closes his books on 31.3.2013. Brokerage at 1% is to be paid for each transaction.
Show Investment account as it would appear in his books. Market value of 8% Debentures of P
Limited on 31.3.2013 is ₹ 99. Assume FIFO method.
(b) (10 Marks)

Jhaveri Sons have their Head Office at Calcutta and a branch at Agra. The goods are sent to
Branch at 20% less than the list price which is cost plus 100%. From the following particulars
ascertain the profit made by the branch as well as the Head Office on wholesale basis :
Head Office (₹) Branch (₹)
Opening Stock (Cost/ Invoice Price) 40,000 20,000
Purchases 4,00,000 -
Expenses 60,000 12,000
Goods destroyed by accident at invoice price - 2,000
Sales at list Price 3,40,000 1,60,000
Goods sent to branch at invoice price 1,60,000 1,60,000
Question 6 (4 * 5 = 20 Marks)
Answer any four of the following :
(a)
The following extract of Balance Sheet of X Ltd. was obtained :
Liabilities ₹
Authorised capital :
20,000, 14% preference shares of ₹ 100 each 20,00,000
2,00,000 Equity shares of ₹ 100 each 2,00,00,000
2,20,00,000
Issued and subscribed capital :
15,000, 14% preference shares of ₹ 100 each fully paid 15,00,000
1,20,000 Equity shares of ₹ 100 each, ₹ 80 paid-up 96,00,000
Share Suspense Account 20,00,000
Reserves and surplus :
Capital reserves (₹ 1,50,000 is revaluation reserve) 1,95,000
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 the provisions of Schedule V.
Would your answer differ if X Ltd. is an investment company?
(b)
When capitalisation of borrowing cost should cease as per Accounting Standard 16?
(c)
A trader intends to take a loss of profit policy with indemnity period of 6 months, however, he
could not decide the policy amount. From the following details, suggest the policy amount:
Turnover in last financial year ₹ 1,50,000
Standing charges in last financial year ₹ 30,000

Net profit earned in last year was 12% of turnover and the same trend expected in subsequent
year.
Increase in turnover expected 20%.
To achieve additional sales, trader has to incur additional expenditure of ₹ 10,000.
(d)
What are the three fundamental accounting assumptions recognized by Accounting Standard 1?
Briefly describe each one of them.
(e)
Sneha Ltd. was incorporated on 1st July, 2013 to acquire a running business of Atul Sons with
effect from 1st April, 2013. During the year 2013-14, the total sales were ₹ 24,00,000 of
which ₹ 4,80,000 were for the first six months. The Gross profit of the company ₹ 3,90,800.
The expenses debited to the Profit & Loss Account included:
(i) Director's fees ₹ 30,000
(ii) Bad debts ₹ 7,200
(iii) Advertising ₹ 24,000 (under a contract amounting to ₹ 2,000 per month)
(iv) Salaries and General Expenses ₹ 1,28,000
(v) Preliminary Expenses written off ₹ 10,000
(vi) Donation to a political party given by the company ₹ 10,000.
Prepare a statement showing pre and post-incorporation profit for year ended 31st March, 2014.


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ACCOUNTING

Total No. of Questions : 6 Total no. of Pages : 9

Question No. 1 is compulsory.

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Capital 4,00,000 Fixed Assets 2,90,000

EQUITY AND LIABILITIES

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(b) (10 Marks)

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(b) (10 Marks)

Stock at cost on 1.1.2010 36,750

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(b) (10 Marks)

Answer any four of the following :

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