Course Title: Financial Accounting - V

Hours / Week (L:T:P) : 4:0:0 Total Contact Hours: 52 Course Code: 15CP51T
CP V
Type of Course: Lectures,
Credit :04 Core/ Elective: Core
Problem Solving and Self Study
CIE- 25 Marks SEE- 100 Marks
Prerequisite: Knowledge of Book Keeping and Basics of Accounting of various business
organisations.

Course Objectives:

The students shall be able to:

1. Install and execute the Departmental Accounting procedures.

2. Execute the Accounting procedure of Consignment business activity.
3. Calculate and settle Insurance claims along with documentations.
4. Execute the procedure of Hire purchase and instalment purchase systems.
5. Install and execute the Accounting system required for mining companies and quarries.

COURSE OUTCOMES : At the end of the course, the students will be able to:

Prepare and present Trading profit and loss account of various departments and
CO1
Balance sheet .
Preparation of account sales, passing of journal entries and drafting of ledger accounts
CO2
in the books of consignor and consignee
CO3 Calculation and settlement of fire insurance claims.
CO4 Execute Hire purchase and installment purchase transactions.
Execute the accounting system for calculation of Royalty accounts suitable to the type
CO5
of activity.

Directorate of Technical Education V Semester Commercial Practice Page 1

 CO-Cognitive Level (CL) -PO MAPPING
Name of the course: Financial Accounting - V
CL Linked Teaching Hrs
Course Outcome
PO

Prepare and present Trading profit R/U/A 1,2,3,4,6,7 10 Hours

CO1 and loss account of various ,9,10
departments and Balance sheet.

Preparation of account sales, R/U/A 1,2,3,4,6,7 08 Hours

passing of journal entries and ,9,10
CO2
drafting of ledger accounts in the
books of consignor and consignee

Calculation and settlement of fire R/U/A 1,2,3,4,6,7 10 Hours

CO3
insurance claims. ,9,10

Execute Hire purchase and R/U/A 1,2,3,4,6,7 12 Hours

CO4
instalment purchase transactions ,9,10

Execute the accounting system for R/U/A 1,2,3,4,6,7 12 Hours

CO5 calculation of Royalty accounts ,9,10
suitable to the type of activity.

COURSE-PO ATTAINMENT MATRIX

Course Programme Outcomes

1 2 3 4 5 6 7 8 9 10

Financial Accounting -
3 3 3 3 3 3 3 3 3 3
v
Level 3- Highly Addressed, Level 2-Moderately Addressed, Level 1-Low Addressed.
Method is to relate the level of PO with the number of hours devoted to the COs which address the given PO.
If >40% of classroom sessions addressing a particular PO, it is considered that PO is addressed at Level 3
If 25 to 40% of classroom sessions addressing a particular PO, it is considered that PO is addressed at Level 2
If 5 to 25% of classroom sessions addressing a particular PO, it is considered that PO is addressed at Level 1
If < 5% of classroom sessions addressing a particular PO, it is considered that PO is considered not-addressed.

Directorate of Technical Education V Semester Commercial Practice Page 2

 COURSE CONTENT AND BLUE PRINT OF MARKS FOR SEE
Legend: R; Remember, U: Understand A: Application
Unit Unit name Hour Questions to be set Marks weightage
for
No Weightage (%)
SEE

R U A

DEPARTMENTAL 10 5 5 20 30 20%
1
ACCOUNTING

2 CONSIGNMENT ACCOUNTS 08 5 5 10 20 14%

3 INSURANCE CLAIMS 10 5 5 20 30 20%

HIRE PURCHASE AND 12 5 10 20 35 23%

4 INSTALLMENT PURCHASE
SYSTEM

5 ROYALTY ACCOUNTS 12 5 5 20 30 23%

Total 52 25 30 100 145 100

COURSE CONTENTS
Hours
Unit Major Topics
Allotted

1 DEPARTMENTAL ACCOUNTING 10

2 CONSIGNMENT ACCOUNTS 08

3 INSURANCE CLAIMS 10

HIRE PURCHASEAND INSTALLMENT PURCHASE 12

4
SYSTEM

5 ROYALTY ACCOUNTS 12

Total 52

Directorate of Technical Education V Semester Commercial Practice Page 3

 DETAILS OF COURSE CONTENTS

UNIT-1 Departmental Accounting

Introduction – Allocation of expenses – Calculation of Departmental Purchases – Inter
Departmental transfers at cost price – selling price – preparation of Balance Sheet

UNIT-2 Consignment Accounts

Introduction – Meaning – Consignor – Consignee – Goods Invoiced at Cost Price – Goods Invoiced
at Selling Price – Normal Loss – Abnormal Loss – Valuation of Stock – Stock Reserve – Journal
Entries– Ledger Accounts in the books of Consignor and Consignee.

UNIT-3 Insurance Claims

Introduction – need – Loss of Stock Policy – Preparation of statement of Cost of Goods sold –
Preparation of Statement to ascertain value of stock on the date of Fire - Treatment of Salvage –
Valuation of stocks prior to date of fire calculation of GP. Ratio when GP Ratio is not given -
Treatment of Average Clause Treatment of Abnormal items -

UNIT-4 Hire Purchase and Installment Purchase System

Meaning of Hire Purchase and Installment Purchase System- difference between Hire Purchase and
Installment Purchase – Important Definitions – Hire Purchase Agreement – Hire Purchase Price –
Cash Price – Hire Purchase Charges – Net Hire Purchase Price – Net Cash Price – Calculation of
Interest – Calculation of Cash Price – Journal Entries and Ledger Accounts in the books of Hire
Purchaser and Hire Vendor ( problems only on hire purchase system under Asset Accrual Method).

UNIT-5 Royalty Accounts

Meaning and definition – Technical Terms – Royalty – Landlord – Tenant – Minimum Rent – Short
Workings – Recoupment of Short Working under (Fixed Period) – Accounting Treatment in the
books of Lessee and lesser – journal entries and Ledger Accounts including minimum rent account.

Books for reference:

∑ Advanced Accountancy by BS Raman
∑ Advanced Accountancy by SN Maheshwari
∑ Financial Accountancy by Dr. S Arun kumar
∑ Financial Accounting by BS Raman

E - Book for Reference: Websites of Dailies and Magazines / Journals of Business, Finance and
Management.

SUGGESTED STUDENT ACTIVITIES:

1. Draft an organization chart showing sales departments for different products.
2. Collect account sales of a consignment transaction and comment on the result.
3. Collect a Pro-forma of fire insurance policy and a claim’s calculation sheet.
4. Collection and recording of Hire Purchase Agreement
5. Collection and recording of Royalty agreement with regard to any suitable situation.

Directorate of Technical Education V Semester Commercial Practice Page 4

 Course Assessment and Evaluation:
What To Frequency Max Marks Course
Whom Outcomes
Theory Evidence
Collected

IA Three IA tests
Tests (Average
CIE marks of Three 20 Blue Books
IA tests are 1 to 5
-
DIRECT ASSESSMENT

continuou considered).
s internal
Class Class room 05
evaluation
room Assignments
Students Log Of 1to5
Assignm
ents Total 25 Activity

See - End Of the 100 Answer Scripts

semester Course
end End 1 to 5
examinati Exam
on

Student Feedback on Middle Of The Feed Back Forms

ASSESSMENT

course Course
METHODS
INDIRECT

End Of Course Students End Of The Questionnaire

Survey Course

*CIE – Continuous Internal Evaluation *SEE – Semester End Examination

Note: I.A. test shall be conducted for 20 marks. Average marks of three tests shall be rounded off to the
next higher digit.
Note to IA verifier: The following documents to be verified by CIE verifier at the end of semester
1. Blue books ( 20 marks)
2. Student suggested activities report for 5 marks evaluated through appropriate rubrics.
3. Student feedback on course regarding Effectiveness of Delivery of instructions & Assessment
Methods.
.
Questions for CIE and SEE will be designed to evaluate the various educational
components such as:

1. Remembering and Understanding : 15 % weightage

2. Applying the knowledge acquired from the course : 30 % weightage
3. Analysis : 35 % weightage
4. Evaluation : 10 % weightage
5. Creating new knowledge : 10 % weightage

Directorate of Technical Education V Semester Commercial Practice Page 5

 Example only: MODEL OF RUBRICS / CRITERIA FOR ASSESSING STUDENT
ACTIVITY-

Directorate of Technical Education V Semester Commercial Practice Page 6

 MODEL QP FOR CIE(TESTS)

Test/Date and Time Semester/year Course/Course Code Max Marks

Ex: I test/6 th week of V SEM Financial Accounting - V 20

Sem 10-11 Am Year: 2016-17 Course code: 15CP51T

Name of Course coordinator : Units:1,2 Co: 1,2

Note: Answer all questions

Question no Question CL CO PO

1 (According to unit and CO1) R 1 1,2

2 (According to unit and CO1) A 1 1,2

3 (According to unit and CO2) A 2 1,2

4 (According to unit and CO2) U 2 1,2

Note: 5 marks choice should be given to each CO

Directorate of Technical Education V Semester Commercial Practice Page 7

 5.1 FINANCIAL ACCOUNTING – V (15CP51T)

MODEL QUESTION PAPER

Time: 3 Hours Max.Marks: 100

Instruction: 1) Answer any SIX Questions from Part – A

2) Answer any FOUR Questions from Part - B
3) Answer any TWO Questions from Part - C

PART - A
(Answer any SIX Questions) 6 x 5 = 30
1. Distinguish between consignment and sale.
1. State the features of hire purchase system.
2. How would you allocate the following expenses among the different departments
1.Advertisement
2.Depreciation
3.Insurance
4.Lighting
5.Rent

3. Manohar and Company of Bangalore consigned to Maruti of Mysore on 1st January

2015,for sale on their account 100 cases of Toys costing Rs. 1000 per case. A
commission of 5%is payable on sales. Manohar and co: pay freight Rs. 5000 and
insurance Rs.1000 and murari accepts the bill and takes the delivery. He pays
unloading charges 500 carriage 500. He send s an account sales on 31st March2015.
Stating that 40 cases were sold at Rs. 1200 each. 35 cases at Rs.1400 each and 25
cases at Rs.150 each. He sends as draft for the balance. Make out Account sales.

4. Distinguish between Hire purchase system and Instalment Purchase Systems.

5. On 1st January 2016, Amith purchased a furniture from Bangalore Furnitures Ltd.,
on Hire Purchase system. The cash price of the furniture is Rs. 7,450. The payment
is made as follows: Rs. 2,000 as down payment and Rs.2,000 annually for three
years as instalments. Calculate interest payable on furniture.

6. Explain the following terms:

(a) Average clause

(b) Under insurance
(c) Over insurance
(d) Salvage
(e) Short sales.

7. Explain
(a) Short workings
(b) Recouping of shortworkings

Directorate of Technical Education V Semester Commercial Practice Page 8

 8. Fire occurred in the premises of Anna and Co. on 1st sep 2015 and stock of the value
of 1,01,000 was salvage and business records were saved. The following
information was obtained :
Purchases for the year ended 31-3-2015 6,80,000
Sales for the year ended 31-3-2015 11,00,000
Purchases from 31-3-2015 to 1-9-2015 2,50,000
Sales from 31-3-2015 to 1-9-2015 3,60,000
Stock on 31-3-2014 3,00,000
Stock on 31-3-2015 3,40,000
Calculate the amount of claims to be presented to the Insurance company.

PART - B

(Answer any FOUR Questions) 4x10 = 40

1 . Mr.Ashok purchased a machine on hire purchase system from Bharat motors on

1-1-2006. The cash price of the machine was Rs74500.and the payment was to be
as follows;
On signing the agreement Rs.20000 and the balance in 3 instalments of Rs.20000
each at the end of each year.5% interest is charged by the vendor. Mr. Ashok has
decided to write off 10% depreciation annually on diminishing balance method.
Calculate the interest and depreciation.

1. From the following information prepare departmental Trading and Profit and Loss
Account of a firm of Dress maker’s

Rs. Rs.
Stock on 1st January 2015
Men’s wear 17,400
Ladies wear 14,700
Purchases
Men’s wear 35,000
Ladies wear 30,000
Sales
Men’s wear 60,000
Ladies wear 40,000
Wages
Men’s wear 8,200
Ladies wear 2,700
Rent, tax and Insurance 9,390
Sundries 3,600
salaries 3,000
lighting 2,100
Discounts 2,220 650
Advertising 3,680
carriage 2,340

Directorate of Technical Education V Semester Commercial Practice Page 9

 (a)Rent and insurance, sundries, lighting, salaries and carriage are to be apportioned in the
ratio 2:1.
(b) Advertising to be divided equally.
(c)Discounts to be allocated on the basis of sales and purchases.
The stock on 31st December 2015 was:
Men’s wear Rs. 16,740
Ladies wear Rs. 12,050
3) A fire occurred on 21st April 2016 in the premises of jwala mukhi and the stock in
trade was destroyed. The following information is however, available to you:
Rs.
Opening stock on 1-1-2016 11,000
Purchase upto 21-4-2016 45,000
Sales upto 21-4-2016 60,000

The stock on hand was always valued at cost price or market price, which ever was
lower. However, the closing stock as at 31st December 2015 was valued at market price
which was 10% above cost.

The percentage of profit usually obtained in the business was 15%.

The savings realized only Rs.400.

Compute the Fire Claim.

4.The Karnataka Minerals Ltd.s acquired a lease from a landlord for the purpose of
extracting ore. It was agreed that the company should pay Rs.12 ton of ore raised subject to
a minimum rent of Rs.36,000 a year and that the shortworking could be recouped in the first
3 years. The output raised for the first 4 years was:

year Production
(Tons)
2012 1750
2013 2750
2014 3750
2015 4750

Write up the Royalties Account, short working Account.

1. A fire occurred in the premises of shri Das on 1st April 2015 and considerable part of the
stock was destroyed . The stock salvaged was Rs. 56,000. Sri Das has taken a fire
insurance policy for Rs. 3,00,000 to cover the loss of stock by fire.
You are required to ascertain the insurance claim which shri Das should claim from the
insurance company for the loss of stock by fire. The following particulars are available:

Rs.
Directorate of Technical Education V Semester Commercial Practice Page 10
Purchases for the year 2014 18,76,000
Sales for the year 2014 23,20,000
Purchases from 1st January 2015 to 1st April 2015 3,64,000
Sales from 1st January 2015 to 1st April 2015 4,80,000
Stock on 1st January 2014 2,88,000
Stock on 31st December 2014 4,84,000

2. Ram of Bangalore sent a consignment of 600 articles to his agent laksham at madras at
an invoice price of 140 Rs. Per article. The following payments were made by Ram:
Railway charges 3150
Insurance 850
Miscellaneous charges 1250
Laksham sold the articles at 260 Rs. Each and sent an Account sales deducting 3500
towards his expenses and also his commission at 5% on gross sales proceeds. Laksham
committed the amount due by cheque.

Journalize the above transactions in the books of Ram and prepare Laksham’s Account.

PART – C

(Answer any TWO Questions) 2 x 15 = 30

1. From the following balances extracted from the books OF B.N Pai, Prepare Departmental
Trading and Profit and Loss Account for the year ended 31st MARCH, 2016 and Balance
Sheet as on that date.

Dr. Cr.
Rs. Rs.
Capital 50,000

Land and Building 12,500

Furniture Department A 2,500
Opening Stock. Dept. A 3,000

Opening Stock. Dept. B 4,000

Purchase Dept A 1,00,000
Purchase Dept B 1,50,000
Sales Dept. A 2,00,000
Sales Dept. B 3,00,000
Audit Fees 5,000
Electricity 10,000
Salaries 50,000
Sales Commission 30,000
Carriage inwards 5,000
Rent 40,000
Sundry Debtors 20,000
Sundry creditors 10,000
Drawings 28,000

Directorate of Technical Education V Semester Commercial Practice Page 11

Cash at Bank 1,00,000
Additional Information:

1. Depreciate Land and Building by 5% and Furniture by 10% per annum.

2. Staff is employed in the ratio of 2:1
3. Area occupied by each Department is equal.
4. Electricity consumption is in the ratio of 1:2
5. Closing stock Dept. A Rs. 13,000 and that of Dept. B Rs. 26,000
6. Audit fees be apportioned on the basis of turnover.

2 .Mohan owned the patent of locks on January 1 st 2000 . He granted Nagesh a license for 5
years to manufacture and sell the lock on the following terms:
(a) Royalty of Rs. 10 per lock sold
(b) Minimum rent of Rs.15,000 per annum
(c) Short working could be recouped only within 2 years following the years in which
the short working occurred subject to maximum of Rs.35,000 p.a
(d) If in any year normal sales was not attained due to strike, the minimum rent was to
be reduced proportionately to the length of stoppage. Nagesh closed his books on
31st December each year. The no. of locks sold during the lease period was as
follows:

year No of books
sold
2000 900
2001 1300
2002 2000
2003 1100
2004 1400

During the year 2003, there was stoppage due to strike tat lasted 4 months . Show the Royalties
receivable account, short workings suspense account and Nagesh’s accounts in the books of
Mohan for each of above years.

3.Mr. Hanuman purchases two trucks on Hire purchase system on 1st January 2016, the cash
price being Rs. 56,000 and payment is to be made as follows: On signing of the contract Rs.
15,000 and there after Rs. 15,000 being paid annually for 3 years. Interest was charge at 5% per
annum. Depreciation was written off at the rate of 20% p.a. on the reducing balance system.
Prepare necessary ledger accounts in the books of Mr. Hanuman.

Directorate of Technical Education V Semester Commercial Practice Page 12

 MODEL QUESSTION BANK

Prepare and present Trading profit and loss account of various departments and Balance
CO1
sheet.
Remembrance:

∑ Explain inter departmental transfers

Understanding:

1. How would you allocate the following expenses among the different departments
1.Advertisement
2.Depreciation
3.Insurance
4.Lighting
5.Rent
Application:

1.From the following information prepare departmental Trading and Profit and Loss Account
of a firm of Dress maker’s

Rs. Rs.
Stock on 1st January 2015
Men’s wear 17,400
Ladies wear 14,700
Purchases
Men’s wear 35,000
Ladies wear 30,000
Sales
Men’s wear 60,000
Ladies wear 40,000
Wages
Men’s wear 8,200
Ladies wear 2,700
Rent, tax and Insurance 9,390
Sundries 3,600
salaries 3,000
lighting 2,100
Discounts 2,220 650
Advertising 3,680
carriage 2,340

Directorate of Technical Education V Semester Commercial Practice Page 13

 3. Rent and insurance, sundries, lighting, salaries and carriage are to be apportioned in the
ratio 2:1.
4. Advertising to be divided equally.
5. Discounts to be allocated on the basis of sales and purchases.
6. The stock on 31st December 2015 was:
Men’s wear Rs. 16,740
Ladies wear Rs. 12,050
Preparation of account sales, passing of journal entries and drafting of ledger accounts
CO2
in the books of consignor and consignee.
Remembrance:

1. Give the meaning of Consignment, consignor and consignee.

Understanding:

1. Distinguish between consignment and sale

Application:

1. Manohar and Company of Bangalore consigned to Maruti of Mysore on 1st January

2015,for sale on their account 100 cases of Toys costing Rs. 1000 per case. A
commission of 5%is payable on sales. Manohar and co: pay freight Rs. 5000 and
insurance Rs.1000 and murari accepts the bill and takes the delivery. He pays
unloading charges 500 carriage 500. He send s an account sales on 31st March2015.
Stating that 40 cases were sold at Rs. 1200 each. 35 cases at Rs.1400 each and 25
cases at Rs.150 each. He sends as draft for the balance. Make out Account sales.

CO3 Calculation and settlement of fire insurance claims.

Remembrance:
∑ Explain the following terms:

(f) Average clause

(g) Under insurance
(h) Over insurance
(i) Salvage
(j) Short sales.
Understanding:

1. Explain the procedure to ascertain the claim for loss of stock.

Directorate of Technical Education V Semester Commercial Practice Page 14

Application:

9. Fire occurred in the premises of Anna and Co. on 1st sep 2015 and stock of the value
of 1,01,000 was salvage and business records were saved. The following
information was obtained :
Purchases for the year ended 31-3-2015 6,80,000
Sales for the year ended 31-3-2015 11,00,000
Purchases from 31-3-2015 to 1-9-2015 2,50,000
Sales from 31-3-2015 to 1-9-2015 3,60,000
Stock on 31-3-2014 3,00,000
Stock on 31-3-2015 3,40,000
Calculate the amount of claims to be presented to the Insurance company.

CO4 Execute Hire purchase and instalment purchase transactions

Remembrance:

1. State the features of hire purchase system

Understanding:

1. Distinguish between Hire purchase system and Instalment Purchase Systems

Application:

1. Mr. Ashok purchased a machine on hire purchase system from Bharat motors on 1-
1-2006. The cash price of the machine was Rs74500.and the payment was to be as
follows;
On signing the agreement Rs.20000 and the balance in 3 instalments of Rs.20000 each
at the end of each year.5% interest is charged by the vendor. Mr. Ashok has decided to
write off 10% depreciation annually on diminishing balance method. Calculate the
interest and depreciation.
Execute the accounting system for calculation of Royalty accounts suitable to the type
CO5
of activity
Remembrance:

1. Give the meaning of Royalty and Explain its features

Understanding:

1. Explain
(c) Short workings
(d) Recouping of shortworkings

Directorate of Technical Education V Semester Commercial Practice Page 15

Application :

1. The Karnataka Minerals Ltd.s acquired a lease from a landlord for the purpose of
extracting ore. It was agreed that the company should pay Rs.12 ton of ore raised subject
to a minimum rent of Rs.36,000 a year and that the shortworking could be recouped in
the first 3 years. The output raised for the first 4 years was:

year Production
(Tons)
2012 1750
2013 2750
2014 3750
2015 4750

Write up the Royalties Account, short working Account.

Directorate of Technical Education V Semester Commercial Practice Page 16

 5.1 FINANCIAL ACCOUNTING – V (15CP51T)

MODEL QUESTION BANK

PART A: QUESTIONS OF 5 MARKS EACH:

1. Explain inter departmental transfers.

2. The following data is obtained for two departments of a retail shop for the year ending
31st March 2015
Dept. A Dept.B
Rs. Rs.
Sales 3,00,000 1,80,000
Gross profit 90,000 54,000
Net profit 60,000 -
Net loss 16,000
purchases 1,80,000 1,08,000

From a study of the above data, find the following:

(a) Percentage of gross profit on sales
(b) Percentage of net profit on sales

3. Explain the procedure to ascertain the claim for loss of stock.

4. On 1st January 2014, the ABC company bought a machine from HMT ltd. On hire
purchase system. The cash price was Rs.26350 and the payment was to be made as
follows.

Rs.10000 on signing the agreement and the balance in 3 yearly instalment of Rs6000
each. 5% interest is charged by the hire vendor. Calculate the interest for each year.

PART B: QUESTIONS OF 10 MARKS EACH:

1. Dress Makers ltd have two departments, cloth and outfitting. The latter department gets
all its requirements of cloth from the cloth departments at the usual selling price. On 31st
December, 2015 the following was the Trial Balance:
Rs. Rs.
Stock 80,000 Share capital 2,00,000
Cloth dept. 4,500
Outfitting dept.
(cloth at cost to the company)
Transfer of cloth from cloth dept. 50,000 Sales:

Directorate of Technical Education V Semester Commercial Practice Page 17

 Cloth dept 12,50,000
Outfitting dept 1,50,000

Purchases: Transfer of cloth of outfitting dept. 50,000

Cloth dept 11,00,000
Outfitting dept 10,000
Directors fee and remuneration 30,000
Wages: Income from investments 9,500
Cloth dept 20,000
Outfitting dept 40,000
Rent and Rates 8,000
(3/4th to cloth dept)
Lighting 2,000
(3/4th to cloth dept)

Depreciation:
Cloth dept 1,000
Outfitting dept 5,000

Office salaries 16,000

Furniture and fittings 20,000
Office expenses 3,000
Equipment 50,000
Carriage inwards on cloth 66,000
Investments 1,00,000

Cash at bank 54,000

16,59,500 16,59,500

Closing stock on hand in the cloth department was Rs. 96,000 and that in outfitting department
amounted to Rs.7,500 .

Prepare Trading and Profit and Loss Account.

2. A fire broke out in the warehouse of Twinkle Traders on 30th sept.2015. The company
wishes to file a claim with the insurance company for loss of stock and gives you the
following information to enable you to prepare a statement of the amount to be claimed:
(a) The last accounts of the company were prepared on December 31st 2014
(b) Sundry debtors on 31-12-2014 Rs. 40,000
(c) Cash received from debtors Rs.1,44,000
(d) Sundry debtors on 31-09-2015 Rs. 30,000
(e) Stock on 31-12-2014 Rs. 15,000
(f) Purchase from 1-1-2015 to 30-9-2015 Rs1,25,000
Directorate of Technical Education V Semester Commercial Practice Page 18
 (g) Rate of gross profit to cost of sales 25%

Prepare the necessary statements, showing all your workings to arrive at the amount of the claim.

3. On 17th June 2015, a fire occurred in the premises of Orient Craft corner. Most of the
stocks were destroyed, cost of salvaged stock being Rs. 11,200. In addition , some stock
was salvage in damaged condition and its value was agreed at Rs. 10,400.
From books of accounts, following particulars were available:
(1)stock at close of accounts on 31st December 2014 was valued at Rs.83,500
(2) Purchases from 1-1-2014 to 17-6-2014 amounted to Rs.1,12,000 and sales during that
period amounted to Rs.1,54,000
(3) on the basis of past 3 years, it appears that average gross profit of 25% is earned on
sales
Stock was insured for Rs. 75,000.
Compute the amount of claim.

4. Jyothi Mining Company is engaged in working a coal mine. O n January 1st 2015 it
entered into an agreement with the owner of th eland which provided for:

(i)A royalty of Rs. 20 per ton of coal raised

(ii) A minimum rent of Rs. 50,000 per annum

(iii) The recovery of short workings within a period of first 3 year

The output during the first 5 years was:

Year Output(Tons)
2011 2000
2012 2250
2013 3000
2014 3800
2015 5000

The amounts due to landlord in respect of each year were paid at the end of the year.

Calculate the amount due to the landlord.

5. Roopa of Bangalore sent an consignment of 1000 articles to her agent Deepa at Madras at
an invoice price of 200 Rs. Per articles. Railway charges cartage and insurance amounted
to 20 Rs. Per article at Madras deepa paid octroi and carriage amounting to Rs.5 per
article. Deepa sold 800 articles at 300 Rs. Each and sent an account sales deducting her
expenses and commission at 10% on gross sale proceeds. Deepa remitted the amount due
by a cheque.

Write up the necessary accounts in the books of both the parties.

Directorate of Technical Education V Semester Commercial Practice Page 19

 6. A Mini Bus is purchased for Rs. 1,60,000 under the hire purchase on 1-1-2015. The
amount payable is Rs. 40,000 on entering the agreement and the balance in 3 annual
installments of Rs. 50,000 each at the end of the year. Depreciation is charged at 10%
p.a. on written down value method. Show the Mini Bus Account and Hire Vendor’s
account.

PART C: QUESTIONS OF 15 MARKS EACH:

2. From the following balances extracted from the books OF B.N Pai, Prepare Departmental
Trading and Profit and Loss Account for the year ended 31st MARCH, 2016 and Balance
Sheet as on that date.

Dr. Cr.
Rs. Rs.
Capital 50,000

Land and Building 12,500

Furniture Department A 2,500
Opening Stock. Dept. A 3,000

Opening Stock. Dept. B 4,000

Purchase Dept A 1,00,000
Purchase Dept B 1,50,000
Sales Dept. A 2,00,000
Sales Dept. B 3,00,000
Audit Fees 5,000
Electricity 10,000
Salaries 50,000
Sales Commission 30,000
Carriage inwards 5,000
Rent 40,000
Sundry Debtors 20,000
Sundry creditors 10,000
Drawings 28,000
Cash at Bank 1,00,000

Additional Information:

7. Depreciate Land and Building by 5% and Furniture by 10% per annum.

8. Staff is employed in the ratio of 2:1
9. Area occupied by each Department is equal.
10. Electricity consumption is in the ratio of 1:2
11. Closing stock Dept. A Rs. 13,000 and that of Dept. B Rs. 26,000
12. Audit fees be apportioned on the basis of turnover.

Directorate of Technical Education V Semester Commercial Practice Page 20

 2 .Mohan owned the patent of locks on January 1 st 2000 . He granted Nagesh a license for 5
years to manufacture and sell the lock on the following terms:
(e) Royalty of Rs. 10 per lock sold
(f) Minimum rent of Rs.15,000 per annum
(g) Short working could be recouped only within 2 years following the years in which
the short working occurred subject to maximum of Rs.35,000 p.a
(h) If in any year normal sales was not attained due to strike, the minimum rent was to
be reduced proportionately to the length of stoppage. Nagesh closed his books on
31st December each year. The no. of locks sold during the lease period was as
follows:

year No of books
sold
2000 900
2001 1300
2002 2000
2003 1100
2004 1400

During the year 2003, there was stoppage due to strike tat lasted 4 months . Show the Royalties
receivable account, short workings suspense account and Nagesh’s accounts in the books of
Mohan for each of above years.

3 . A fire occurred in the premises of a company on 1-7-2016. From the following information
calculate the claim to be made against the company.
Rs.
Stock on 1-1-2015 63,000
Purchase for the year end31-12-2015 4,00,000
Sales for the year ending 31-12-2015 5,00,000
Wages for the year ending 31-12-2015 20,000
salary for the year ending 31-12-2015 10,000
stock on 31-12-2015 81,000
Purchase from 1-1-2016 to date of 5 year 2,00,000
Sales from 1-1-2015 to date of 5 year 3,00,000
Stocks salvaged 10,000
Value of policy 30,000

There is an average clause in the policy. It is the practice of the company to value the stock at
10% less than the cost.

4. Mr. Hanuman purchases two trucks on Hire purchase system on 1st January 2016, the cash
price being Rs. 56,000 and payment is to be made as follows: On signing of the contract Rs.
15,000 and there after Rs. 15,000 being paid annually for 3 years. Interest was charge at 5%
per annum. Depreciation was written off at the rate of 20% p.a. on the reducing balance
system. Prepare necessary ledger accounts in the books of Mr. Hanuman.

Directorate of Technical Education V Semester Commercial Practice Page 21

5 . A fire occurred in the premises of a company on 1-7-2016. From the following information
calculate the claim to be made against the company.
Rs.
Stock on 1-1-2015 63,000
Purchase for the year end31-12-2015 4,00,000
Sales for the year ending 31-12-2015 5,00,000
Wages for the year ending 31-12-2015 20,000
salary for the year ending 31-12-2015 10,000
stock on 31-12-2015 81,000
Purchase from 1-1-2016 to date of 5 year 2,00,000
Sales from 1-1-2015 to date of 5 year 3,00,000
Stocks salvaged 10,000
Value of policy 30,000

There is an average clause in the policy. It is the practice of the company to value the stock at
10% less than the cost.

Directorate of Technical Education V Semester Commercial Practice Page 22