ACCOUNTS 32

(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 Question 2 (compulsory) from Part I 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

[6 2]

Q1. Mention two differences between Premium on Issue of Debentures and

Premium on Redemption of Debentures.
Answer:
Q2. Explain pro-rata allotment of shares by means of a suitable example
Q3. Mention any two differences between Revaluation Account and Realisation
Account.
Q4. Why is the word memorandum affixed to the Memorandum Joint Venture
Account ?.
Q5. Mention any four sources of funds.
Q6. When drafting a company balance sheet under Schedule VI Part I, under which
heading and sub-heading will calls in arrear and calls in advance appear ?

PART II

Question 2

The following is the Balance Sheet of Anju and Manju sharing profits in the ratio
of 3:2 as on December 31, 2003 :
Balance Sheet as at December 31, 2003

Liabilities

Amount

Assets

Amount

(Rs.)
Creditors

12,000

(Rs.)
Plant and Machinery

14,000

Loan by Anjus brother

5,000

Furniture and Fixtures

2,000

Loan by Manju
General
Reserve

7,500

Investment

5,000

1,250

Stock

3,000

Capitals :

Debtors

Anju

5,000

Manju

4,000

Bank loan

Total

Less: provision

10,000
500

9,500

9,000

Bank

5,750

7,000

Profit and Loss

2,500

41,750

Total

41,750

[12]

The Balance Sheet of Rohit, Nisha and Sunil who are partners in a firm
sharing profits according to their capitals as on 31st March 2006 was as
under:
Liabilities
Amount
Assets
Amount
(Rs.)
(Rs.)
Creditors
25,000
Machinery
40,000
Bills Payable
13,000
Building
90,000
General Reserve
22,000
Debtors 30,000
Capital
Less Provision 1.000
29,000
Rohit 60,000
for Bad debts
Nisha 40,000
Stocks
23,000
Sunil 40,000
1,40,000
Cash at Bank
18,000
2,00,000

2,00,000

On the date of Balance Sheet, Nisha retired from the firm, and following
adjustments were made:
(i) Building is appreciated by 20%.
(ii) Provision for bad debts is increased to 5% on Debtors.
(iii) Machinery is depreciated by 10%.
(iv) Goodwill of the firm is valued at Rs.56,000 and the retiring partners
share is adjusted.
(v) The capital of the new firm is fixed at Rs.1,20,000.New profit sharing ratio
is 2:5.
Prepare Revaluation Account, Capital Accounts of the partner and Balance
sheet of the new firm after Nishas retirement

. Question 5

[12]

Sun India Ltd. invited applications for 40,000 Shares of Rs. 100 each at a premium of Rs.
20 per share payable as follows:
On Application Rs. 40 (including Rs.5 premium)
On Allotment Rs. 30 (including Rs.15 premium)
On First Call Rs. 30
On Second & Final Call Rs. 20
Applications were received for 50,000 shares and pro-rata allotment was
made on the application for 44,000 share. Excess application money is to be
Utilized towards allotment.
Umesh to whom 800 Shares allotted failed to pay the allotment money and
his shares were forfeited after allotment.
Suresh who applied for 1,320 shares failed to pay first call and his share were
Forfeited after first Call. Second and final call was made after that. All the money due on
second call have been received.

Of the shares forfeited, 1,000 share were reissued as fully paid-up for Rs. 80
per share, which included the whole of Umeshs shares.
Record necessary journal entries in the books of Sun India Ltd.

Question 6

[12]

Narang, Suri and Bajaj are partners in a firm sharing profits and losses in
proportion of 1/2 , 1/6 and 1/3 respectively. The Balance Sheet on April 1, 2007
was as follows:
Balance Sheet as on April 1, 2007
Liabilities
Amount
(Rs.)
Bills Payable
12,000
Sundry Creditors
18,000
Reserves
12,000
Capital Accounts:
Narang 30,000
Suri 20,000
Bajaj 28,000

Assets

Amount
(Rs.)
Building
40,000
Machinery
30,000
Furniture
12,000
Stock
18,000
Acculated loss
6,000
Sundry Debtors 20,000
Less: Reserve
for Bad Debt
1,000
19,000

88,000
Cash
1,30,000

7,000
1,30,000

Sunil joins the business and the partners agree to the following:
a) Building and stock are to be appreciated by 10% and 25%
respectively.
b) Machinery and furniture are to be depreciated by 10% and 12% respectively.
c) Bad Debts reserve is to be increased to Rs. 1,800.
d) Goodwill is valued at Rs. 42,000 Sunil is able to bring half share of his
goodwill.Half of the goodwill brought is withdrawn by the partners .
e) New profit sharing ratio is 3:2:1:1
f) The partners have decided to adjust their capitals in their new
profit sharing ratio after admission of Sunil. Surplus/deficit, if any, in their
capital accounts will be adjusted through current accounts.
Prepare necessary ledger accounts and draw the Balance Sheet of the
reconstituted firm.

[10]

Question 7

The following are the ledger balances extracted from the books of
Coopers and Company Limited:
Amount

Authorized share capital 1,00,000 equity shares of 10 each.

10,00,000

Issued and subscribed share capital 1,00,000 equity shares of 10

each

10,00,000

Calls in arrear

1,000

Profit and loss account(Cr)

1,00,000

10% Debentures
Debenture interest accrued but not due

1,42,500
7,500

Fixed deposits accepted

1,21,000

Provision for taxation

68,000

General reserve

2,10,000

Proposed dividend

60,000

Creditors

2,00,000

Plant and Machinery

5,25,000

Stock

2,50,000

Debtors

2,00,000

Land

2,00,000

Preliminary expenses

13,300

Advances to directors

42,700

Furniture

50,000

Cash

30,000

Bank

2,47,000

Building

3,50,000

Prepare the Balance Sheet of the company as per Schedule VI, Part I of
the Companies Act, 1956.

SecctionIII
Question 8

[12]

The following data is available from Allen and Company

Limited:
Debtors

turnover

ratio 4 times. Cost

of goods sold
6,40,000 Gross profit
ratio 20%.
Closing debtors were 20,000 more than
at the beginning. Cash sales being 33 13 of
credit sales.
From the above, calculate the amount of opening debtors
and closing debtors.
(b) The following figures have been extracted from Regal and
Company Limited: Stock at the beginning of the year 60,000
Stock at the end of the year
1,00,000 Stock turnover ratio 8
units.
Selling price 25% above cost.
Compute the amount of gross profit and sales.
(c) The following information is provided to you pertaining to Parker
and Company Limited:
The above company has a current ratio 3:1
Its current liabilities are 25,000.
Calculate its current assets and working capital.

(d) The following information is available from Scott and C

mpany Limited: Opening stock 30,000.
Closing stock 40,000 Carriage inwards
10,000 Purchases 1,00,000 Current assets
50,000 Current liabilities 20,000 Fixed assets
80,000
Indirect expenses 15,000 Sales . 2,00,000
Calculate the Stock turnover ratio and Working Capital turnover ratio.
(e) The follo ing information is available from Walter and
Company Limited: Stock turnover ratio 5 times
Stock at the end of the year is 15,000 more than the stock in the
beginning of
the year.
Sales 2,00,000
Gross profit ratio
25%
Current liabilities
50,000 Quick ratio
0.75
Calculate the current assets of the company.
Question 9

[12]

Prepare a Common size and comparative Balance Sheet from

the following:
Particulars

Note
No.

Share Capital
Reserves and Surplus

31.3.2012

31.3.2011

Rs.

Rs.

6,00,000

6,00,000

10,00,000

6,80,000

Long-term Borrowings

3,00,000

3,00,000

Trade Payables

5,90,000

4,12,000

Short term provisions

10,000

Fixed assets

7,50,000

8,00,000

Non-Current Investments
Cash &cash equivalent

6,06,250
1,08,750

4,00,000
95,000

Trade Receivables

6,25,000

4,50,000

Inventory

4,10,000

2,55,000

8,000

Question 10

[12]

CalculateCashflowsfromoperatingactivitiesfromthefollowinginformation:
Profitfortheyear2003
04.....................................................
Rs.50,000
TransfertoGeneralReserveDuringtheyear................................... Rs.10,000
Depreciationprovidedduringtheyear............................................. Rs.20,000

Profit on sale of
Furniture.......................................................
Loss on sale of
Machine...................................................................

..Rs.5,000

Preliminaryexpenseswrittenoffduringtheyear............................
Particulars
Debtors
BillsReceivables
Stock
PrepaidExpenses
Creditors
BillsPayable
OutstandingExpenses

31.3.03
10,000
7,000
15,000
2,000
20,000
15,000
3,000

Rs.10,000
Rs.10,000
31.3.04
15,000
5,000
18,000
3,000
18,000
25,000
4,000

(12)