OMTEX CLASSES: ACCOUNTS BOARD PAPER FEBRUARY 2014

OMTEX CLASSES

Accounts Board Paper Feb. 2014

Q. 1. Attempt any Three of the following. [15]

A. Answer in one sentence only:

1. What do you mean by 'carriage inward'?

Ans. The expenses incurred to bring raw materials inside the factory is known as carriage inward. It is a direct expenses and its recorded in the Debit side of Trading A/c.

2. What is 'due date of a bill'?

Ans. The date on which the bill will become mature for pay is known as due date the bill.

3. What is 'deficit'?

Ans. Debit balance of Income and Expenditure account is known as Deficit, it is the expenditure over income of a 'Not for Profit' Concern.

4. What do you mean by 'sacrifice ratio'?

Ans. The proportion of future profit shared by old partners to the new partner during the admission of a new partner in some ratio is known as Sacrifice ratio. Its formula is_

Sacrifice ratio = Old Ratio – New Ratio

5. Which statement is prepared under single entry system to ascertain profit?

Ans. Statement of Profit or loss is prepared under single entry system to ascertain profit.

B. Write the word / Term / Phrase which can substitute each of the following statement:

1. The debit balance of trading account. (Gross loss)

2. The excess of total assets over total liabilities of a 'not for profit concern'. (Capital Fund)

3. Expenses incurred on dissolution of a partnership firm. (Realisation expenses)

4. Transfer of title of a bill from a debtor to a creditor. (Endorsement of bill of exchange)

5. The statement showing profitability of two different periods and its percentage change. (Comparative income statement)

C. Select the most appropriate alternative from the given below and rewrite the statement:

1. When shares are forfeited, share capital account is _____________

a. debited

b. credited

c. adjusted

d. none of the above

2. A bill drawn and accepted on 23^rd November, 2012 for two months will payable on _____________

a. 23^rd January, 2012

b. 23^rd January, 2013

c. 25^th January, 2013

d. 26^th January, 2013

3. If the opening capital is Rs. 80,000, closing capital is Rs. 1,80,000, withdrawals are Rs. 10,000 and additional capital brought in is Rs. 20,000, the profit will be Rs. ______________

a. 90,000

b. 1,10,000

c. 70,000

d. 1,50,000

4. Assets and liabilities are transferred to Realisation Account at their _________ value.

a. market

b. purchase

c. sale

d. book.

5. Share of profit or a deceased partner till the date of his death is ____________

a. debited to profit and loss adjustment account

b. credited to profit and loss adjustment
account.

c. debited to profit and loss suspense account.

d. credited to profit and loss suspense account.

D. State whether the following statements are True or False.

1. Honour of bill means payment in accordance with the apparent tenor of the bill. (True)

2. The issue of debenture more than the face value is termed as issue of debenture at par. (False)

3. Return inward is deducted from purchases. (False)

4. Ratio analysis is useful for inter – firm comparison. (True)

5. Renewal is a request by drawee to cancel the old bill and draw a new bill by extending the credit period. (True)

E. Prepare a bill of exchange from the following details.

Drawer : Ramesh Mishra, L.B.S. Road, Ghatkopar, Mumbai

Drawee : Nandkumar Sharma, Laxmi Road, Pune

Payee: Rupesh Kumar Pande, Rajkamal Chowk, Amaravati.

Period of bill: 90 days

Amount of bill : Rs. 25,000

Date of Bill: 17^th February, 2014

Date of Acceptance: 20^th February, 2014

Accepted for : Rs. 20,000 only.

Q2. Mr. Keshav keeps his books on single entry system and disclosed the following information of his business. [8 MARKS]

Particular	1 st April, 12 (Rs.)	31 st March, 13 (Rs.)
Investments		30000
Bills payable		18000
Creditors	52500	69000
Furniture	15000	45000
Debtors	60,000	90,000
Stock in Trade	30,000	37,500
Cash at Bank	36,000	54,000

Additional information

(1) Mr. Keshav transferred Rs. 3,000 per month during the first half year and Rs. 2000 per month for the second half year from business account to his personal account.

(2) he also took goods worth Rs. 7,000 for private use.

(3) He sold his private asset for Rs. 27,000 and brought the proceeds into his business.

(4) Furniture to be depreciated by 10%

(5) Provide reserve for doubtful debts at 5% on debtors.

Prepare: (i) Opening statement of affairs.

(ii) Closing statement of affairs.

(iii) Statement of Profit and Loss for the year ended 31^st March, 2013.

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Q2. A. What are the different 'Cash inflows' and 'Cash outflows' of operating activity? (4)

B. State and explain any 'four objectives' of financial statement analysis from business point of view. (4)

Q3. Mrs. Shehal and Mrs. Meenal are equal partners in a business. Their balance sheet is as follows.

Balance Sheet as on 31^st March, 2013 [10 MARKS]

Liabilities		Amount Rs.	Assets		Amount Rs.
Capital A/cs			Premises		20,500
Snehal	80000		Investments		10,500
Meenal	45000	125000	Equipments		5,000
Creditors		46,000	Bills Receivable		18,000
General reserve		20,000	Debtors	110000
			( - ) R.D.D.	11000	99000
			Bank Balance		38,000
		191,000			191,000

They agreed to admit Mr. Komal on 1^st April, 2013 on the following terms:

(1) Komal should bring Rs. 50,000 towards her capital for one fourth (1/4^th )Share in future profit.

(2) Goodwill to be raised in the books of the firm for Rs. 40,000.

(3) R.D.D. to be maintained at 5% on debtors.

(4) Premises to be valued at Rs. 30,000 and
equipments to be written off fully.

(5) Creditors allowed a discount of Rs. 1,000 and they were paid off immediately.

Prepare: Profit and Loss Adjustment Account, Partner's Capital Accounts and Balance Sheet of the new firm.

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Pravin, Prakash and Paresh were partners sharing profits and losses in the proportion to their capitals. their balance sheet of the firm on 31^st March, 2013 was as under.

Balance sheet as on 31^st March, 2013

Liabilities	Amount (Rs.)	Assets		Amount (Rs.)
Capital A/cs		Land and Building		80,000
Pravin	60,000	Investments		40,000
Prakash	40,000	Debtors	32000
		Less: R.D.D.	-4000	28000
Creditors	56000	Stock		36000
Reserve Fund	36000	Cash		28000

	212000			212000

Paresh died on 1^st August, 2013 and the following adjustments were made:

(1) Assets were valued as – Land and building Rs. 88,000. Investments Rs. 36,000 and Stock Rs. 34,000.

(2) All debtors were good.

(3) Goodwill of the firm valued at two times the average profit of the last 4 years' profit.

(4) Paresh's share of profit upto his death to be calculated on the basis of average profit of the last two years.

(5) Profits for the last four years were: Rs. 12,000, Rs. 24000, Rs. 14000 and Rs. 22000.

Prepare: (i) Profit and Loss Adjustment Account.

(ii) Paresh's Capital Account, showing the amount payable to his executor.

(iii) Give working of Paresh's share in Goodwill and Profit.

Q4. Journalise the following transactions int he books of Kedarnath:

1. Badrinath informs Kedarnath that Aloknath's Acceptance of Rs. 16,000 endorsed to Badrinath has been dishonoured and noting charges amounted to Rs. 500.

2. Somnath renews his acceptance of Rs. 14,400 to Kedarnath by paying cash Rs. 4,400 and accepting a new bill for 2 months for the balance plus interest @ 12% p.a.

3. Vishwanath retired his acceptance for Rs. 10,500 to Kedarnath by paying in cash Rs. 10,250

4. Recovered only 50% of the amount due from his private estate of Ramnath, who declared as insolvent, against his bill of Rs. 12,500. [10 MARKS]

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Q5. Devendra and Ganesh were partners sharing profits and losses in the ratio of 3:2. They dissolved the partnership firm on 31^st March, 2013 when their position was as follows.:

Balance Sheet as on 31. 03. 2013

Liabilities	Rs.	Rs.	Assets	Rs.	Rs.
Sundry Creditors		12,500	Debtors	56250
Bank overdraft		10,000	(-) R.D.D.	( - ) 6250	50,000
Reserve Fund		15,000	Stock		1,12,500
Capital Accounts			Furniture		25,000
Devendra	1,15,000		Motor Car		37,500
Ganesh	75000	190000	Cash in hand		2500
		227500			227500

The assets realised as follows:

(1) Debtors Rs. 45,000, stock Rs. 1,00,000 and goodwill Rs. 12,500

(2) Motor car was taken over by Devendra for Rs. 35,000 and furniture by Ganesh for Rs. 30,000.

(3) The creditors were paid Rs. 11,250 in full settlement.

(4) The realisation expenses were Rs. 5,000.

Pass necessary journal entries in the books of the firm.

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Khandelwal Co. Ltd. made an issue of 40,000 equity shares of Rs. 20 each, payable as follows:

Application : Rs. 5 per share

Allotment : Rs. 10 per share.

First call: Rs. 3 per share.

Second and Final call: Rs. 2 per share.

The company received applications for 45,000 shares of which applications for 5000 shares were rejected and the money refunded. All the shareholders paid upto second call except Sachin, the allottee of 2,000 shares, failed to pay final call.

Pass Journal Entries for the above transactions in the books of Khandelwal Co. Ltd.

Q6. Following is the Receipts and Payments Account of Chamber of Commerce, Amaravati for the year ending 31^st March, 2012 and some additional information. [12 MARKS]

Receipts and Payments A/c For the year ended 31.03.2012

Receipts	Amount	Payments	Amount
To balance b/d (Cash at bank)	11,960	By Printing and Stationery	6950
To subscription (Including Rs. 2500 for 2010 – 11)	36500	By Repairs	2100
To Sale of furniture (Books value Rs. 18,000)	12000	By Rent	8500
To Donation for building fund	27000	By Books	20000
To Admission fees (Revenue)	5050	By Travelling expenses	2000
		By Investments	40,000
		By Insurance	1700
		By Balance c/d (Cash at bank)	11260

	92510		92510

Additional information:

Particulars	1.04.2011	31.03.2012
Outstanding subscription	3000	5000
Furniture	32000	12600
Building fund	145000
Capital fund	151960
Investment	250000

Prepare Income and Expenditure A/c for the year ended 31^st March, 2012 and balance sheet as on that date.

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Q7. Miss Meena and Miss Reena are in partnership sharing profits and losses in the ratio of 3:2.

From the following trial balance and adjustments, you are required to prepare Trading Account, Profit and Loss Account for the year ended 31^st March, 2013 and Balance Sheet as on that date.

Trial Balance as on 31.03.2013

Particulars		Amount (Rs.)	Particulars		Amount (Rs.)
Building		400000	Capital Accounts
Plant and machinery		120000	Meena	300000
Purchases		650000	Reena	200000	500000
Carriage		7000	Sales		814000
Opening Stock		90000	Sundry creditors		180000
Wages		35000	Bank overdraft		20000
Sundry debtors		150000
Salaries		28000
Postage and telegram		4000
Insurance		5000
Bad debts		3000
Rent		4000
Discount		3000
Drawings
Meena	10000
Reena	5000	15000
		1514000			1514000