ISC ACCOUNTS 5

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9741280409

(Three hours )
(Candidates are allowed additional 15 minutes for only reading the paper.
They must NOT start writing during this time)
Answer Question 1 (compulsory and any other five questions from Part II.
The intended marks for questions or parts of questions are given in brackets [ ].
Transactions should be recorded in the answer book.
All calculations should be shown clearly.
All working, including rough work, should be done on the same sheet as, and adjacent to, the rest of the
answer.

PART I

Question 1

[10 2]

Q1Nametwofactorsaffectinggoodwillofthefirm.
Q2. Under what circumstances are separate set of books kept for joint venture?
Q3WhatismeantbyRedemptionofDebenturesbyLumpsumPayment?
Q4. What is a joint life policy? What is the objective of taking a joint life policy by the
partnership firm?
Q5. Distinguish between Chargeable Expenses and Overhead Expenses.
Q6. Give any 2 points of differences between Revaluation A/c and Realization A/c.
Q7. Give any 2 differences between Calls-in-arrear & Calls- in- advance.
Q8. What are the journal entries to record the interest due on capital and for transfer of
the same to P/L Appropriation A/c assuming that capitals are maintained under fixed
capital method?
Q9. Give two points of distinction between cost centre and cost unit.
Q10. What is material return note?

PART II
Question 1

[10]

John, Robert and Dolly are partners in a firm sharing profits

in the ratio of 2:2:1 respectively. Firm closes its accounts on
31st March every year. Robert died on 30th September 2012.
There was a balance of Rs.96,000 in Roberts Capital account in
the beginning of the year. In the event of death of any partner.
The partnership deed provides for the following:
Interest on capital will be calculated at the rate of 12% p.a.
The Executor of deceased partner shall be paid Rs.15,000 for
his share of goodwill.
His share of Reserve fund which is Rs.10,000, shall be paid to
executor.
His share of profit till the date of death will be calculated on the
basis of sales. It is also
specified that the sales during the year 2011-12 were
Rs.8,00,000. The sales from 1st April 2012 to 30th September
2012 were Rs.1,50,000. The profit of the firm for the year
ending 31st
March 2012 was Rs.1,00,000.
(v)There was profit and loss account (Dr) Rs 20,000
in the books.
Prepare Roberts Capital account and his executor
account.

Question 2
The following is the Balance Sheet of Arun and Tarun sharing profits 3:2 as on December 31, 2001 :
Liabilities
Creditors
Mrs. Aruns Loan
Taruns
Loan
5000
Bills
payable
General Reserve
Capitals :
Arun
10,000
Tarun
8,000
Total

Amount
(Rs.)

Assets

Amount
(Rs.)

40,000
10,000

Cash
Stock

14,000
8,000

10,000

Debtors
Less :
Provisions
Furniture
Plant
Investments
Profit and
Loss
Total

5,000
18,000
88,000

18,000
1,000

17,000
4,000
30,000
10,000
5,000
88,000

The firm was dissolved on December 31, 2001 and the following was the result:
(a) Arun took over investments at Rs. 8,000 and agreed to pay off the loan of his
wife.
(b)The asset realized as follows :
Stock Rs. 2,000, Debtors Rs. 20,500, Furniture Rs. 1,000 more, Plant
Rs. 20,000 less.
(c) Arun was to bear realization expenses for which he was to be paid Rs
1,000.Actual Expenses of realization were Rs.1,200.
(d)There was a typewriter worth Rs 10,000 which was taken over by one of the
creditor of Rs 15,000 and remaining Creditors were paid off less 3%
discount.
Show ledger accounts to close the books of the firm
Question 3

[10]

J.P. Limited purchased Building costing Rs.70,00,000 from M/s

Construction Limited. The Company paid Rs.20,50,000 by
cheque and for the balance issued Rs 50,00.000 Debentures of
Rs.100 each in favour of M/s Construction Limited.
Pass necessary journal entries in the books of J.P. Limited for
the purchase of building and making payment if debentures
were issued(a) at 10% discount and (b) at a premium of 25%. (c)
at par

Question 4

[10]

Salim & Sons bought goods of the value of Rs7,500 and consigned them to
Tahir and Co. to be sold to them on a joint venture, profit being divided in
2/3 : 1/3. They also paid Rs 550 for freight, insurance and cartage and
drew on Tahir and Co. for Rs 3,000 on account. The bill was discounted by
Salim & Sons for Rs 2,900. Tahir and Co. paid Rs 300 for dock dues,
storage, rent etc. The sales realised Rs 12,500 and the sales expenses Rs
250 were defrayed by Tahir and Co. The later forwarded a sight draft for
the balance due to Salim & Sons after charging theirsales commission at 5
percent on the gross proceeds.
Required: Write up the accounts in the books of both the parties. No
interest need to be brought into account.

Question 5

Sunny and Bobby are two partners sharing profits and losses
equally their capital stood at 50,000 and 60,000 respectively.
After the division of profit, it was found that interest on capital
@ 10% and salary to Sunny of Rs 3,000 per month were ignored
while distribution of profits. However, there was no clause for
partners salary in the partnership deed. Besides this, after
closely auditing the accounts, it was discovered that profit of Rs

90,000 was distributed in the ratio 2 :1. Rectify these errors by

passing a necessary adjusting Journal entry.

Question 5

[10]

Mahaluxmi Limited invited applications for issuing 1,00,000 Equity Shares of Rs.10
each. The amount was payable as follows:
On Application Rs.3 per share; On Allotment Rs.5 per share; Balance on first & final
call. Applications for 1,40,000 shares were received. Allotment was made to all
applicants on pro-rata basis. Excess money received on application was adjusted
towards sums due on allotment. Ramesh, who had applied for 1,400 shares, did not
pay the allotment money and on his failure to pay the allotment money his shares
were forfeited. After wards, the first and final call was made. Kapoor, who had been
allotted 1,000 shares, did not pay the first and final call. His shares were also
forfeited. Out of the forfeited shares 1,800 shares were reissued at Rs.8 per share fully
paid up. The reissue shares included all the shares of Ramesh

Pass necessary journal entries and prepare

the balancesheet.

SECTION II
Question 1

[10]

Trading and Profit and Loss Account of Myers Ltd. for the year ended 31st March 2007.
Particulars

Rs.

Particulars

Rs.

To opening stock

25,250

By sales

90,100

To purchases

53,050

By closing stock

19,600

To carriage

400

To wages

1,000

To Profit and Loss A/c 30,000

1, 09,700
To Administrative expenses

20,200

1, 09,700
By Trading A/c

To salaries

2,400

By non operating income

To financial expenses

1,400

To Non-operating expenses

To Balance c/d

30,000
11,200
400

16,800
41,200

41,200

Balance Sheet of Myers Ltd. As at 31st March, 2007.

Liabilities

Rs

Share capital

80,000

Assets
Fixed assets

60,100
19,000

Reserves

1,200

Stock

Profit and Loss A/c

6,800

Debtors

Creditors

23,700

Bank

1.01,700

Rs.

9,000
23,600
1,01,700

From the above, calculate the follow ratios:

(i)

Operating ratio

(ii)

Net Profit ratio (%)

(iii)

creditor turnover ratio.

(iv)

Proprietary ratio

(v)

Current ratio

(vi)

Acid test ratio ratio.

(vii)

Working capital turnover ratio

(b) From the following information, calculate the stock turnover ratio:
Sales: Rs.400000; GP : 25% on cost; Opening Stock was 1/3rd of the value of closing stock.
Closing Stock was 30% of sales.
(b) A business has a current ratio of 3:1 and a quick ratio of 1.5:1.If the working capital is Rs.180000, calculate the
total current assets and stock.

Question 2

[10]

FromthefollowingBalanceSheetsofVinodLimited,prepareCashFlowStatement
Particulars
NoteNo.
3132012
3132013
I.EQUITYANDLIABILITIES:
ShareholdersFunds:
EquityShareCapital
1,90,000
1,90,000
ReserveandSurplus:
ContingenciesReserve
30,000
30,000
StatementofProfit&Loss
8,000
11,500
NoncurrentLiabilities
LongTermBorrowings:8%Debentures
45,000
35,000
CurrentLiabilities:
TradePayables(Creditors)
51,500
48,000
OtherCurrentLiabilities(OutstandingExpenses)
6,500
6,000
Total
II.ASSETS:
3,31,000
3,20,500
NonCurrentAssets:

FixedAssets:
TangibleAssets
CurrentAssets:
ShorttermInvestment
Inventories
TradeReceivables
Cash&CashEquivalents
OtherCurrentAssets(PrepaidExpense)

Total
NotestoAccounts
Particulars
1.TangibleAssets
LandandBuilding
Machinery
Less:AccumulatedDepreciation

2012
1,50,000
26,000
1,76,000
20,000
1,56,000

1,56,000

1,63,000

55,000
41,000
33,500
45,000
500

37,000
53,000
21,500
45,000
1,000

3,31,000

3,20,500

2013
1,50,000
35,000
1,85,000
22,000
1,63,000

AdditionalInformation:
(a) 10%dividendwaspaidincash.
(b) NewMachineryforRs.15,000waspurchasedbutoldMachinerycostingRs.6,000wassold
forRs.2,000,accumulateddepreciationwasRs.3,000.
(c) Rs.10,000, 8% Debentures were redeemed by purchase from the open market @ Rs.96 for a
DebentureofRs.100.
(iv)Rs.18,000Investmentweresoldatbookvalue.