1

Q.7(a) Raj Ltd. gives you the following information for the year ended 31st March, 2006:

Sales for the year Rs 48,00,000. The Company sold goods for cash only.
Cost of goods sold was 75% of sales.
Closing inventory was higher than opening inventory by Rs 50,000.
Trade creditors on 31.3.2006 exceed the outstanding on 31.3.2005 by Rs 1,00,000.
Tax paid during the year amounts to Rs 1,50,000
Amounts paid to Trade creditors during the year Rs 35,50,000
Administrative and Selling expenses paid Rs 3,60,000
One new machinery was acquired in December, 2005 for Rs 6,00,000.
Dividend paid during the year Rs 1,20,000.
Cash in hand and at Bank on 31.3.2006 Rs 70,000.
Cash in hand and at Bank on 1.4.2005 Rs 50,000.
Prepare Cash Flow Statement for the year ended 31.3.2006 as per the prescribed Accounting
standard.

(b) What all are the differences between Cash & CASH Equuivalents?

Q.8From the following summarized Cash account of S Ltd., prepare cash flow statement for
the year ended 31st march, 2009 in accordance with AS 3 {revised) using direct method

Summarized Cash Account

Particulars (Rs 000)

Opening balance 50 Payment

Bank loan to suppliers 2000
300
Issue of share capital 300 Closing balance
Purchase of fixed assets 150200

ReceivedTotal
from customers 3250
2800 Total
Overhead expenses 3250
200
5aIe of fixed assets 100 Wages and salaries
Tax paid 250
Dividend paid 50

Q.9. Rama Udyog Limited was incorporated on August 1, 2008. It had acquired a
running business of Rama & Co. with effect from April 1, 2008. During the year 2008-09,
2
the total sales were Rs. 36,00,000. The sales per month in the first half year were half of
what they were in the
Later half year. The net profit of the company, Rs 2,00,000 was worked out after
charging the following expenses:

(i)Depreciation Rs 1,08,000, (ii) Audit fees Rs 15,000, (iii) Directors’ fees Rs 50,000, (iv)
Preliminary expenses Rs 12,000, (v) Office expenses Rs 78,000, (vi) Selling expenses Rs 72,000
and (vii) Interest to vendors upto August 31, 2008 Rs 5,000.

Please ascertain pre-incorporation and post-incorporation profit for the year ended 31st
March, 2009.
Q.10 Following items appear in the Trial Balance of Saral Ltd. as on 31st March, 2014:

Particulars Amount
4,500 Equity Shares of Rs100 each 4,50,000
Capital Reserve including Rs 40,000 being profit on sale of 90,000
Plant)
Securities Premium 40,000
Capital Redemption Reserve 30,000
General Reserve 1,05,000
Profit and Loss Account (Cr. Balance) 65,000

The company decided to issue to equity shareholders bonus shares at the rate of 1
share for every 3 shares held. Company decided that there should be the minimum
reduction in free reserves. Pass necessary Journal Entries in the books Saral Ltd.
3
Q.18 On 2.6.2007 the stock of Mr. Black was destroyed by fire. However, following particulars
were furnished from the records saved:

Particulars Rs

Stock at cost on 1.4.2006 1,35,000

Stock at 90% of cost on 31.3.2007 1,62,000
Purchases for the year ended 31.3.2007 6,45,000
Sales for the year ended 31.3.2007 9,00,000
Purchases from 1.4.2007 to 2.6.2007 2,25,000
Sales from 1.4.2007 to 2.6.2007 4,80,000

Sales upto 2.6.2007 includes Rs 75,000 being the goods not dispatched to the customers.
The sales invoice price is Rs 75,000.
Purchases upto 2.6.2007 includes a machinery acquired for Rs 15,000. Purchases upto
2.6.2007
Does not include goods worth Rs 30,010 received from suppliers, as invoice not received
upto
The date of Fire. These goods have remained in the godown at the time of fire. Value of
stock salvaged from Fire Rs 22,500 and this has been handed over to the insurance
company. The insurance policy is for Rs 1,20,000 and it is subject to average clause. Ascertain
the amount of claim for loss of stock.
Q.22 The following is the Balance Sheet of Bum bum Limited as at 31st March, 2009:

Rs

Sources of funds

Authorized capital

50,000 Equity shares of Rs. 10 each

5,00,000

10,000 Preference shares of Rs. 100 each 10,00,000

15,00,000

Issued, subscribed and paid up

30,000 Equity shares of Rs. 10 each 300,000

5,000, 8% Redeemable Preference shares of Rs. 10 each 500000

Reserves & Surplus

Securities Premium 6,00,000

General Reserve 6,50,000

Profit & Loss A 1,80,000

4
2,500, 9% Debentures of Rs. 100 each 2,50,000

Sundry Creditors 1,70,000

26,50,000

Application of funds

Fixed Assets (net) 7,80,000

Investments (market value Rs. 5,80,000) 4,90,000

Deferred Tax Assets 3,40,000

Sundry Debtors 6,20,000

Cash & Bank balance 2,80,000

Preliminary expenses 1,40,000

26,50,000

In Annual general meeting held on 20th june 2009 the company passed the following

i. To split equity share of Rs. 10 each into 5 equity shares of Rs. 2 each from 1st July, 09.

ii. To redeem 8% preference shares at a premium of She.

iii. To redeem 9% Debentures by making offer to debenture holders to convert their

holdings into equity shares at Rs. 10 per share or accept cash on redemption.

iv. To issue fully paid bonus shares in the ratio of one equity share for every 3 shares
held on record date.

On 10th July, 2009 investments were sold for Rs. 5,55,000 and preference shares were
redeemed.

40% of Debenture holders exercised their option to accept cash and their claims were
settled On 1st August, 2009

The company fixed 5th September, 2009 as record date and bonus issue was concluded by
12th September, 2009.

You are requested to journalize the above transactions including cash transactions and
prepare Balance Sheet as at 30th September, 2009. All working notes should
form part of your answer
5
Q. 23 A firm M/s. Alag, which was carrying on business from 1st July, 2010 gets itself
incorporated as a company on 1st November, 2010. The first accounts are drawn upto
31st March 2011. The gross profit for the period is Rs 56,000. The general expenses are Rs
14,220; Director's fee Rs 12,000 p.a.; Incorporation expenses Rs 1,500. Rent upto 31st
December was Rs 1,200 p.a after which it is increased to Rs 3,000 p.a. Salary of the
manager, who
Incorporation of the company was made a director, is Rs 6,000 p.a. His
remuneration
Thereafter is included in the above figure of fee to the directors. Give statement
Showing pre and post incorporation profit. The net sales are Rs 8,20,000, the
Monthly average of which for the first four months is one half of that of the
remaining
Period. The company earned a uniform profit. Interest and tax may be ignored

Q.29 What are the three fundamental accounting assumptions recognized by Accounting
Standard
(AS) 1? Briefly describe each one of them.

Q.37 On 11.11.2007 the premises of Rocky Ltd. was destroyed by fire. The following information
is made available:
Particulars
Stock as on 1.4.2006 3,75,000

Purchases from 1.4.2006 to 31.3.2007 5,20,000

Sales from 1.4.2006 to 31.3.2007 8,55,000

Stock as on 31.3.2007 2,00,000

Purchases from 1.4.2007 to 11.11.2007 3,41,000

Sales from 1.4.2007 to 11.11.2007 4,35,500

In valuing the stock on 31.3.2007, due to damage 50% of the value of the stock which originally
cost

Rs 22,000 was written off. In June, 2007 about 50% of this stock was sold for Rs 5,500 and
the balance of obsolete stock is expected to realize the same price (i.e., 50% of the original
6
cost). The gross profit ratio is to be assumed as uninform in respect of other sales. Stock
salvaged from fire amounts to Rs 11,500. Compute the value of stock last in fire.
7

Q.39 A trader intends to take a loss of prof* policy with indemnity period of 6
months, however, he could not decide the policy amount. From the following details,
suggest the policy amount: Rs

Turnover in last financial year 4,50,000 (amounts in Rs.)

Standing charges in last financial year 90,000 (amounts in Rs.)

Net profit earned in last year was 10% of turnover and the same trend expected in
subsequent year. Increase in turnover expected 2596.

To achieve additional sales, trader has to incur additional expenditure of Rs 31,250.

Q. 17 On 1st April, 2010, Rajat has 50,000 equity shares of P Ltd. at a book value of Rs
15 per share (face value Rs 10 each). He provides you the further information:

(1)On 20th June, 2010, he purchased another 10,000 shares of P Ltd. at Rs 16 per share.

(2) On 1st August, 2010, P Ltd. issued one equity bonus share for every six shares held by
the shareholders.

(3) On 31st October, 2010, the directors of P Ltd. announced a right issue which entitle
the holders to subscribe three shares for every seven shares at Rs 15 per share.
Shareholders can transfer their rights In full or in part. Rajat sold 1/3rd of entitlement to
Umang for a consideration of Rs 2 per share and subscribe the rest on 5th November,
2010.

You are required to prepare Investment A/6 in the books of Rajat for the year ending 31st
March, 2011.
8

Q, 11.Pass journal entries for the following transactions:

(i) Conversion of 2 lakh fully paid equity shares of Rs 10 each into stock of Rs 1,00,030
and balance as 12% fully convertible Debenture.
(ii) Consolidation of 40 lakh fully paid equity shares of Rs 2.50 each into 10 lakh fully paid
Equity
(Ill) Sub-division of 10 lakh fully paid 11% preference shares of Rs 50 each into 50 lakh fully
paid
11K preference shares of Rs 10 each.

(lv) Conversion of 12K preference shares of Rs S,00,00o Into 14% preference shares Rs
3,00,000
and remaining balance as 12% Non-cumulative preference shares.

Q1. (a) Under what circumstances can an enterprise Change its accounting policy?

(b) Ram Co. (P) Ltd. furnishes you the following information for the year ended 31.3.2005:

Deprecation for the year ended 31.3.2005 (under straight line method) Rs 100 lakhs

Depreciation for the year ended 31.3.2005 (under written down value Rs 200 lakhs
method)
Excess at deprecation for the earlier years calculated under written down Rs 500 lakhs
value method over straight line method

The Company wants to Change its method of claiming depreciation from straight line
method to written down value method. Detailed, how the depreciation should be disposed
in the Financial Statement for the year ended 31.3.2005.
9