accounts paper may 2015

Roll No.

Total No. of Questions - 7

TimeAllowed-3Hours

1.

HALAnswers to questions are to be given only in English except in the case of

candidates who have opted for Hindi Medium. If a candidate has not opted for Hindi

Medium, answers in Hindi, hislher answers in Hindi will not be valued.

Questions No. L is compulsory.

Candidates are also required to answer any five questions

from the remaining six questions.

Working notes should form part of the answer.

"Wherever necessary, suitable assumptions should be made and indicated in answer by

the candidates."

(a) Prepare Cash Flow from Investing Activities of

Furnishings Limited for the year ended 31-3-2015.

Particulars

Plant acquired by the issue of 8Vo Debentures

Claim received for loss of plant in fire

Unsecured loans given to subsidiaries

Interest on loan received from subsidiary companies

Pre-acquisition dividend received on investment made

Debenture interest paid

Term loan repaid

Interest received on investment

(TDS of { 8,200 was deducted on the above interest)

Book value of plant sold (loss incurred t 9,600)

HAL

Total No. of Printed Pages - 16

Maximum Marks - 100

Marks

lv[/s. Creative 5

(

1,56,000

49,600

4,95,000

82,500

62,400

1,16,000

4,25,000

68,000

84,000

P.T.O.

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Q)

HAL Marks(b) A construction contractor has a fixed price contract for t 9.000 lacs to s

build a bridge in 3 years time frame. A surnmary of some of the

flnancial data is as under :

(Amount t in lacs)

Year 1 Year 2 Year 3

Initial Amount for revenue agreed in 9.000 9.000 9,000

contract

Variation in Revenue (+) 200

Contracts costs incurred up ro the 2A% 6168*

reporting date

Estimated profit for whole conrract 950 1000 1000

*Includes T 100 lacs for standard nraterials stored at the site to be used

in year 3 to complete the work.

x*Excludes t 100lacs for standard material brought forwar,J fiom year 2.

The variation in cost and revenue in year 2 has been approved by

cuslomer. -compute year wise amount of revenue, expenses, contract cost to

complete and profit or loss to be recognized in the Sratement of Profit

and Loss as per AS-7 (revised).

(c') IvIr. Mehul gives the following information relating ro itenrs forming s

part of inventory as on 31-3-2015. His factory produces product Xusing Raw material A.

(i) 600 units of Raw material A (purchased @ t i20). Replacemenr

cost of raw material A as on 31-3-2ijl5 is { 90 per unit.

200

8 100**



(3)

HAL

500 units of partly finished goods in the process of producing X

and cost incurred till date < 260 per unit. These units can be

finished next year by incurring additional cost of { 60 per unit.

1500 units of finished Product X and total cost incuned T 320 per

unit.

Expecfed selling price of product X is T 300 per unit.

Determine how each item of inventory will be valued as on 31-3-2015.

Also calculate the value of total inventory as on 3l-3-2015.

ici Mls. Laghu Udyog Limited has been charging depreciation on an item

of Plant and Machinery on straight line basis. The machine was

purchased on 1-4-2012 at ( 3,25,000. It is expected to have a total

useful life of 5 years from the date of purchase and residual value of

t 25,000. calculare the book value of the machine as on l-4-2014 and

the total depreciation charged till3l-3-2014 under sLM. The company

wants to change the method of depreciation ancl charge depreciation @

20Vo on WDV from 2014-15.

Is it valid to change the method of depreciation ? Explain the treatment

required to be done in the books of accounts in the context of 45-6.

Ascertain the amount of depreciation to be chalged for ZAl4^15 and the

net book value of the machine as on 31-3-2015 after giving effect of the

above change,

(ii)

r iii;

Marks

HAL P"T.O.



(4)

HAL Marks2. The financial position of two companies IWs. Abhay Ltd. and IWs. Asha Ltd. 16

as on 3I-3-2015 is as follows :

Balance Sheet as on 31-3-2015

Sources ofFunds

Share Capital - Issued and Subscribed

15,000 equity shares @ T 100, fully paid

10,000 equity shares @ t 100, fully paid

General Reserve

Profit & Loss

Securities Premium

Contingency Reserve

I2Vo Debentures, @ < 100 fully paid

Sundry Creditors

Application of Funds

Land and Buildings

Plant and Machinery

Goodwill

Inventory

Sundry Debtors

Bank

15,00,000

2,75,000

75,000

1,50,000

45,000

55,000

10,00,000

1,25,000

25,000

50,000

30,000

2,50,000

35,000

15,15,000

8,50,000

3,45,000

4,20,000

3,05,000

1,80,000

5,75,000

2,25,000

1,45,000

2,40,A00

2,85,000

45,000

15,15,000



(s)

HAL

They decided to merge and form a new company

l-4-2015 on the followins terms :

Marks

M/s. Abhilasha Ltd. as on

(1) Goodwill to be valued at 2 years purchase of the super profits. The

normal rate of return rs I}Vo of the combined share capital and general

reserve. All other reserves are to be ignored for the purpose of goodwill.

Average profits of IWs. Abhay Ltd. is < 2,75,000 and IWs. Asha Ltd. is

{ 1.75.000.

(2) Land and Buildings, Plant and machinery and Inventory of both

companies to be valued at I}Vo above book value and a provision of

lU%o to be provided on Sundry Debtors.

(3) I2Vo debentures to be redeemed by the issue of 12Vo preference shares

of lWs. Abhilasha Ltd. (face value of t 100) at a premium of 107o.

(4) Sundry creditors to be taken over at book value. There is an unrecorded

liability of { 15,500 of M/s. Asha Ltd as on l-4-2015.

(5) The bank balance of both companies to be taken over by IWs.

Abhilasha Ltd. after deducting liquidation expenses of { 60,000 to be

borne by IWs. Abhay Ltd. and lWs. Asha Ltd. in the ratio of 2: l.

You are required to :

(i) Compute the basis on which shares of IWs. Abhilasha Ltd. are to be

issued to the shareholders of the existing company assuming that the

nominal value of per share of lfls. Abhilasha Ltd. is { 100.

(ii) Draw Balance Sheet of IWs. Abhilasha Ltd. as on 1-4-2015 after the

amalgamation.

HAL P.T.O.



3.

(6)

HAL

(a)ThepartnefsKarnalarrdVimaldecicledtoCtrll\'elttlreir

partnershipbusinessintoaPrivateLimitedComparrycailed

Turnover

Interest. on investments

Less : Cost of goods scrld

Advertisement

Sales Comrnission

SalarY

102.00 I

Managin g directors remuneratiotl

Interest on Debentures

Rent

Bed Debts

Underwnting Commission

Audit fees

Loss on sale of investment

Depreciation

Nla-':ks

existing L0

N4ls. KV

240"00

6.00

Tracling Private Ltd. with effect from I -7 -2014'

Thesanlebcroksofaccountswerecontinuedbythecompanywhich

closed its account for first term on 31-3-2015

The summ artzedProfit and Loss Account for the year ended 31-3-2015

is below :

R) ln lakhs (il in lakhs

3.00

6"00

t 8.00

6.00

2.00

5.50

1.00

2.00

2.00

1.00

4.00

TIAL



(7)

HAL lVIarksThe fnllor',,i'g additionai infonnation was provided

(i) The average monthly sales doubled from 1-T-ZAl4. Gp ratin wasconstant.

(ii) All investments rvere sold on 3I-5-20I4.(iii) Average nronrhly salary doubled from 1_10 -2014.

(iv) The company occupied additional space ftom I-7-2014 for whichrent of t 20.000 per month ,"vas incurred.

(v) Bad debts .eco.,'ered amounting to t 50,000 for a sale made in2012, has breen deducted from bad debts mentioned above.

(vi) Audit fees pertains ro the company.

Prepare a statement apportioning the expenses between pre and postinco4poration periods and calculate the Profit/Loss for such periods"Also ,suggest how the pre-incorporation profits are to be clealt with.

(b) NUs. Platinum Jewellers r,vants to take up a "Loss of Profit policy" fbr 6the

'vea'r 2015. The e-xlract of the Profit and Loss Account of the

previous .vear ended 3 1 - I I .2014 provided below :

fVariable Expentes

Cost of Matenals

file{ErpsNsr

Wages f,:r skillecl craftsmen

Salaries

Audit Fees

Rent

Bank Charges

Interest income

Net Profir

19,60,000

1,60,000

2.90,000

,40,000

64,000

19,000

44,000

6,72,000

HAL P.T.O.



(8)

HAL Marks

Turnover is expected to grow by 25Vo next year'

To meet the growing working capital needs the partners have decided to

avail overdraft facilities from their bankers @ IZVo p.a. interest

The average daily overdraft balance will be around t 2 lakhs.

The wages for the skilled craftsmen will increase by 20Vo and salaries

by ly7o in the current year. A11 other expenses will remain the same.

Determine the amount of policy to be taken up for the current year by

IWs. Platinum Jewellers.

4. The following is the Balance Sheet of lWs. Care Traders as on L-4-2014 : 16

tSources of Funds

Share Capital

Profit and Loss

Unsecured loan @ IOVo

Trade Payables

10,00,000

1,47,800

1,75,000

45,800

13,68,600

Application of Funds

Machinery

Furniture

Inventory

Trade Receivables

Bank Balance

8,25,500

t,28,700

1,72,0w

2,29,600

12,800

13,68,600

A fire broke out in the premises on 3I-3-20t5 and destroyed the books of

account. The accountant could however provide the following information :

(1) Sales for the year ended 3l-3-2014 was { 18,60,000. Sales for the

current year was 20Vo Inghet than the last year.

IIAL



(e)

HAL Marks

(2) 25Vo sales were made in cash and the balance was on credit.

(3) Gross profit on sales ts 30Vo.

(4) Terms of Credit

Debtors : 2 months

Creditors : 1 month

All creditors are paid by cheque and all credit sales are collected in

cheque.

v (5) The Bank Pass Book has the following details (other than payment to

creditors and collection from debtors)

Machinery purchased 1,14,000

Rent paid 1,32,000

Advertisement expenses 80,000

Travelling expenses 78,400

Repairs 36,500

Sales of furniture 9.500

Cash withdrawn for petty expenses 28,300v

Interest paid on unsecured loan 8,750

(6) Machinery was purchased on I-10-2014.

(7) Rent was paid for 11 months only and 25Vo of the advertisement

expenses relates to the next year.

(8) Travelling expenses of { 7,800 for which cheques were issued but not

presented in bank.

(9) Furniture was sold on l-4-2014 at a loss of < 2,900 on book value.

(10) Physical vertification as on 3l-3-2015 ascertained the stock position at

< 1,81,000 and petty cash balance at nil.

(11) There was no change in unsecured loan during the year.

HAL P.T.O.



(10)

HAI,

Down payment

I't installment at the end of first year

2nd installment at the end of 2nd year

3d installment at the end of 3'd year

Interest is charged at lAVc p.a.

Marks

(12) Depreciation is to be provided at IlTc on machinery and 207a on

furnifure.

Prepare Bank Account, Trading and Profit and Loss Account for the year

ended 31-3-2015 in the books of M/s. Care Traders and a Balance Sheet as

on that date. Make necessary assumptions wherever necessary.

5. (a) Lucky bought 2 tractors from Happy on 1-10-2011 on the following

terms:

t5,00,000

2.65,000

2,45,000

2,75,000

Lucky provides depreciation @ 2AVc on the diminishing balances.

An 30-9-2014 Lucky failed to pay the 3'd installment upon which

Huppy repossessed 1 tractor. Happy agreed to leave one tra.ctor with

Lucky and adjusted the value of the tractor against the amount due. The

tractor tetken over was valued on the basis of 307a depreciation annually

on written down basis. The balance amount remaining in the vendor's

accoutrt after the above adjustment was paid by Lucky after 3 rnonths

with interest @ 18% p.a.

You are required to :

(1) Calculate the cash price of the tractors and the interest paid with

each installment.

(2) Frepare Tractor Account and Happy Account in the books of

Lucky assutring that books are closed on Septemtrer 30 every

year. Figures nlay be rounded off to the nearest rupee.

HAL



(11t

HAL h{arks

ib) I!lr. Chatur had 12% Debentures of Face Yalue { t00 of h,Us. Unnari fr

Ltd. as cuffent investments.

He provides the following details relating to the investments.

r-4-2014 opening balance 4000 debenrures costing { 9g each

l-6-2ar4 Purchased 2000 debentures @ ? 120 cum interest

l-9-20I4 Sold 3000 debentures @ t 110 cum interest

l-12-2014 Sold 2000 debentures r@ t 105 ex interest

-31-1-2015 Purchased 3000 debentures @ t 100 ex interesr

1 l1-3-2015 Market value of the investments ( 105 each

Interest due dates are 30n June and 3l't December.

Mr. Chatur closes his books on 3l-3-2015. He incurrecl 2Zo trrokerase

for all his transactions.

Show investment account in the books of Nlr. chatur assurning FIFC}

method is followed.

6 A and B who carry on partnership business in the name of hd/s. AB t,ttl., 16v closes their firm's account as on 3l't March each vear.

Their partnership agreement provides :

(i) Profit & Loss sharing, A:213 and B : l/3.

(ii) On retirernent or adrnission of Partner :

(a) If the change takes place during any accounting year, such

partner's share of profits or losses fbr the period up to retirenrent

or from admission, is to be amived at by apportionment on a time

basis except otherwise stated for specific itern(s).

(b) No account for Goodwill is to be rnaintained in the firnr's bouks.

HAL p.T.O.



(r2)

HAL

(c) Any balance due to an outgoing partner is to carry interest

9Vo p.a. from the date of his retirement to the date of payment.

The Trial Balance of the firm as on March 31", 2015 was as follows :

Marks

@

24,000

12,000

9,000

4,400

6,000

1,20,000

22,000

30,000

94,000

15,500

18,000

5,400

800

1,200

500

1,000

3,000

Capital Account

A

B

C - Cash brought in on 30-09-2014

Plant and machinery at cost

Depreciation provision up to 31-03-2014

Motor car at cost

Depreciation provision up to 3l-03-2014

Purchases

Stock as on 3l't March 2014

Salaries

Debtors

Sales

Travelling expenses

Office Maintenance

Conveyance

Trade Expenses

Creditors

Rent and Rates

Bad Debts

Cash in hand and at Bank

HAL



(13)

HAL Marks'A' retired from the firm on 30ft September, 2014 and on the same day .C'

an

employee of the firm was admitted as partner. Further Profits or Losses shall

be shared - B : 3/5 and C:2/5. Necessary Accounting Entries adjustments

were pending up to 3l-A3-2015. You are given the following furtherinformation:

(i) The value of firm's goodwill as on 30ft September, 2014 was agreed to

t 15,000.

v (ii) The stock as on 3l't March,2015 was valued at t 1g.550.

(iii) Partners' drawings which are included in Salaries : A - t 2.000.

B-(3,000andC-{ 1,000.

(iv) Salaries also includes { 1,500 paid to C prior to his being admitted as a

partner.

(v) Bad-debts of { 500 related to the period upto 30ft September, ZOI4.

(vi) As on 31't March, 2015 rent paid in advance amounted to ( 600 and

trade expenses accrued amounted to { 250.

(vii) Provision is to be made for depreciation on Plant and Machinery and on

Motor car at the rate of I\Vo p.a. on cost.

(viii) A bad-debts provision, specifically attributable to the second half of the

year, is to be made @ 5vo on debtors as on March 3l*t 2015.

(ix) Amount payable to A on retirement remained unpaid till March 31't

2015.

You are required to prepare :

(a) The Trading and Profit & Loss Account for the year ended March 31't

2015.

(b) Partners' capital Account for the year ended March 3l't 2015.

(c) The Balance Sheet as on that date.

HAL P.T.O.



(14)

HAL Marksi\nswer any fnur out of fhe following :

(a) From the following informatiou of M/s. Officers Sporrs Club (A non- 4

profit organization) calculate (i) the total cost of sports material

consumed in the club and (ii) Sale value of sports material during the

year 2CI14-15.

IOpening balance of spons material as on l-4-2014 56,g00

Closing balance of sports material as on 31-3-2015 32,q00

Sports material purchased in cash 23,500

Payment made to creditors of sports material 64,300

Creditors for sports materiais

Opening

Closing

20e March 2014

12th July zar4

1Oth Augus t 2014

8,000

14,000

12,000

HAL

1 month

2 months

1 month

2 months

23,200

29,4AA

Out of the total sports material used during the year 4AVo was consumed

by the club and the remaining rvas sold at a profit of zTvo on cost. v

(b) From the following details, find out the averugedue date : 4

Date nf Bill Amount (t) Usance of bill

29'n January 2014 10,000



(15)

TIAL(c) Given the following informarion of hd/s. paper products Ltd.

Marks

4

I

(i) Goods of { 60,000 were sold on

the buyer these were deiivered on

20-3-2015 bur at rhe request of

10-4-2015.

(ii) on 15-1-2015 goods of { 1,50.000 were sent on consignment basis

of which 20va of the goods unsold are lying with the consisnee as

on 31-3-2015.

(iii) { 1,20,000 worrh of goods were soid on approval basis on

1-lz-2014. The period of approval was 3 months after which they

were considered sold. Buyer sent approval for 75vo goods up to

31-l-20r5 and no approval or disapproval received for the

remaining grrods rill 3i_3-2015.

(iv) Apart from the above, the company has made cash sales ofT 7,80,000 (gross). Trade discount af 5vo was alrowed on the cash

sales.

You are required to advise the accountant of AiVs. paper prr:ducts Ltd.,

with valid reasons, the amount tn be recognized as revenue in above

cases in the context of AS-9 and also determine the totai revenue to be

recognized for the year ending 3l_3_2015.

(d) what factors are to be considered at the time of choosing an appropriate 4

Accounting Software for an organization ,?

I

HAL P.T.O.



(16)

HAL

(e) Mis. Versatile Limited purchased machinery for { 4,80,000 (inclusive 4

of excise duty of { 40,000). CENVAT credit is available for 50Vo of the

duty paid. The company incurred the foliowing other expenses for

installation.

Cost of preparation of site for installation

Total labour charges

(200 out of the total of 600 men hours worked, were spent

for installation of the machinery)

Spare parts and tools consumed in installation

Total salary of supervisor

(time spent for installation was 25Vo of the total time worked)

Total administrative expenses

(1/10 relates to the plant installation)

Test run and experimental production expenses

Consultancy charges to architect for plant set up

Depreciation on assets used for the installation

(

21,000

66,000

6,000

24,000

32,000

23,000

9,000

12,000

The machine was ready for use on 15-1-2015 but was used from

l-2-2015. Due to this delay further expenses of { 19,000 were incurred.

Calculate the value at which the plant should be capitalized in the books

of M/s. Versatile Limited.

HAL



accounts paper may 2015

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