CA (INTERMEDIATE)

ACCOUNTING

CHAPTERS – 9, 10, 11

MARKS- 50
TEST PAPER - 3
QUESTION PAPER DURATION- 90 MINS

INSTRUCTIONS:

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QUESTION 1:
Mr. Purohit furnishes the following details relating to his holding in
8% Debentures(` 100 each) of P Ltd., held as Current assets:
1.4.20X1 Opening balance – Nominal value ` 1,20,000, Cost ` 1,18,000
1.7.20X1 100 Debentures purchased ex-interest at `98
1.10.20X1 Sold 200 Debentures ex-interest at ` 100
1.1.20X2 Purchased 50 Debentures at ` 98 ex-interest
1.2.20X2 Sold 200 Debentures ex-interest at `99
Due dates of interest are 30th September and 31st March.
Mr. Purohit closes his books on 31.3.20X2. Brokerage at 1% is to be paid for each
transaction(at ex-interest price). Show Investment account as it would appear in his
books. Assume FIFO method. Market value of 8% Debentures of P Limited on
31.3.20X2 is ` 99.
(10 Marks)

QUESTION 2:
On 29th August, 20X2, the godown of a trader caught fire and a large part of the
stock of goods was destroyed. However, goods costing ` 1,08,000 could be
salvaged incurring fire fighting expenses amounting to `4,700.
The trader provides you the following additional information:
`
Cost of stock on 1st April, 20X1 7,10,500
Cost of stock on 31st March, 20X2 7,90,100
Purchases during the year ended 31st March, 20X2 56,79,600
Purchases from 1st April, 20X2 to the date of fire 33,10,700
Cost of goods distributed as samples for advertising from
1st April, 20X2 to the date of fire 41,000
Cost of goods withdrawn by trader for personal use
from1st April, 20X2 to the date of fire 2,000
Sales for the year ended 31st March, 20X2 80,00,000
Sales from 1st April, 20X2 to the date of fire 45,36,000
The insurance company also admitted firefighting expenses. The trader had
taken the fire insurance policy for ` 9,00,000 with an average clause.
Calculate the amount of the claim that will be admitted by the insurance
company. (8 Marks)

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QUESTION 3:
On January 1, 20X1 HP M/s acquired a Pick-up Van on hire purchase from FM
M/s. The terms of the contract were as follows:
(a) The cash price of the van was `1,00,000.
(b) `40,000 were to be paid on signing of the contract.
(c) The balance was to be paid in annual instalments of `20,000 plus
interest.
(d) Interest chargeable on the outstanding balance was 6% p.a.
(e) Depreciation at 10% p.a. is to be written-off using the straight-line method.
You are required to:
(a) Give Journal Entries and show the relevant accounts in the books
of HP M/s from January 1, 20X1 to December 31, 20X3; and
(b) Show the relevant items in the Balance Sheet of the purchaser
as on December 31, 20X1 to 20X3.
(16 Marks)

QUESTION 4:
On 1st April, 2019 Mr. Shyam had an opening balance of 1000 equity shares of X Ltd
` 1,20,000 (face value `100 each).
On 5.04.2019 he further purchased 200 cum-right shares for ` 135 each. On
8.04.2019 the director of X Ltd announced right issue in the ratio of 1:6.
Mr. Shyam waived off 100% of his entitlement of right issue in the favour of Mr.
Rahul at the rate of ` 20 each.
All the shares held by Shyam had been acquired on cum right basis and the total
market price (ex-right) of all these shares after the declaration of rights got reduced
by ` 3,400.
On 10.10.2019 Shyam sold 350 shares for ` 140 each.
31.03.2020 The market price of each share is ` 125 each.

You are required to prepare the Investment account in the books of Mr. Shyam for the
year ended 31.03.2020 assuming that the shares are being valued at average cost.
(8 Marks)

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QUESTION 5:
Ram’s godown caught fire on 29th August, 2020. Large part of the stock of goods
was destroyed and goods costing ` 56,350 could be salvaged. Ram provides you the
following additional information:

`
Cost of stock on 1st April, 2019 3,55,250
Cost of stock on 31st March, 2020 3,95,050
Purchases during the year ended 31st March, 2020 28,39,800
Purchases from 1st April, 2020 to the date of fire 16,55,350
Cost of goods distributed as samples for advertising from 20,500
1st April, 2020 to the date of fire
Cost of goods withdrawn by trader for personal use from
1st April, 2020
to the date of fire 1,000
Sales for the year ended 31st March, 2020 40,00,000
Sales from 1st April, 2020 to the date of fire 22,68,000

Ram had taken the fire insurance policy for ` 4,00,000 with an average clause. You
are required to compute the amount of the claim that will be admitted by the
insurance company.
(8 Marks)

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