OMTEX CLASSES: ACCOUNTS PAPER TWO

MODEL QUESTION PAPERR NO. II

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

A. Answer in one sentence only:

1. What is Final Accounts?

2. What do you mean by Freight?

3. Who is a drawer?

4. What is Statement Affairs?

5. What is Capital Deficiency?

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

1. Payment of the bill before due date. (Retirement of bill)

2. Debit Balance in Realisation Account. (Realisation Loss)

3. Stock in hand at the end of the accounting year. (Closing Stock)

4. A Statement similar to Balance sheet. (Statement of Affairs)

5. Name of intangible Assets having a value. (Goodwill.)

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

1. Noting charges must be borne by ____ (Drawee)

a. Drawer b. Drawee c. Payee d. Endorser

2. Realisation Account is _____ on realisation of assets. (credited)

a. Debited b. Credited c. Deducted d. Added.

3. Increase in the value of assets should be ____ to profit and loss adjustment account. (Credited)

a. Debited b. Credited c. Added d. Deducted

4. The capital balances are ascertained by preparing ________ (Statement of affairs)

a. Statement of affairs. b. Cash Account c. Drawing Account. d. Debtors account.

5. Income and Expenditure Account is a ______ (Nominal Account)

a. Capital Account. b. Real Account C. Personal Account d. Nominal Account.

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

1. All transactions are recorded in Single Entry System. (False)

2. Receipts and Payment Account do not have any opening Balance. (False)

3. A bill can't be deposited into bank for collection. (False)

4. Drawee can transfer the ownership of the bill. (False)

5. On Dissolution, cash or bank account is closed automatically. (True)

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

On 10^th March, 1995 Rajesh Bhoyar, Gandhinagar, Nagpur draws a 2 months bill for Rs. 3,000 on Samir Choudhary, Main Road, and Belapur. Samir Choudhary accepted the bill on 15^th March 1995.

Q2. The following information is available from Ram’s records:

Ans.

Beginning Capital 83000

End Capital 81000

Trading Profit 27000

Net Profit 25000

Particular	1.4.06	31.3.07
Creditor Bank overdraft Bank balance Plant and machinery Furniture Debtors Stock	5,000 - 10,000 10,000 4,000 30,000 34,000	8,000 15,000 - 20,000 4,000 52,000 28,000

Ram had withdrawn Rs.5000 for personal expenses and Rs. 4000 for son’s marriage. Out of business funds, he had also purchased a residential building costing Rs.20000, which is not shown in the above balance. Additions to Machinery were made on 1/04/06. Dep. at 10 %p.a. should be provided on plant and machinery. Find out Ram’s net profit for the year ended 31^st march 07.

Q2. A. State the Objectives of Analysis of Financial Statements.(4)

(B) What is Cash Flow Analysis? (4)

Q3. The Balance Sheet of Ramakant and Shyamkant who shared the profits in the ratio of 2:1 is as under: [Ans. Loss on revaluation 16080]

Balance Sheet as on 31 st March, 2012.

Liabilities	Amount Rs.	Assets	Amount Rs.
Capitals: Ramakant Shyamakant Creditors Rent Outstanding Reserve Fund Current A/c: Ramakant	134000 120000 51000 10000 7200 2800	Leasehold Property Livestock Loose Tools Stock Debtors 48000 (-) R.D.D. - 2000 Bank Current A/c :Shyamkant	20000 6600 90200 84800 46000 75400 2000
	325000		325000

On 1st April, 2012 Umakant was admitted as 1/4 th partner on the following conditions:

1. He brings equipment of Rs. 80000 as his capital.

2. Firm’s goodwill is valued at Rs. 1,44,000 and Umakant agreed to bring his share in the firm’s goodwill by cheque.

3. R.D.D. should be maintained at 7.5 % on debtors.

4. Increase the value of livestock by Rs. 2,600 and write off loose tools by 20%.

5. Outstanding rent paid Rs. 9040 in full settlement.

Pass necessary journal entries to record the above scheme of admission.

Pai, Amba and Manoj are partners in a firm sharing profit and losses in the proportion to their capitals. Their Balance Sheet as on 31st March 2012 is as follows.

[Ans. Profit on Revaluation Rs. 1800, Pai's loan A/c 37720 Balance sheet total 150800]

Liabilities	Amount	Assets	Amount
Capitals: Pai Amba Manoj Creditors Outstanding Expenses Profit and Loss A/c	30000 30000 15000 7000 15000 20000	Cash Stock Debtors Plant Building Motor Van Goodwill	3000 12000 20000 13000 20000 31000 18000
	117000		117000

On the above date Pai retired and the following adjustments have been agreed upon.

1. Goodwill was valued at Rs. 15,000

2. Assets and liabilities were revalued as under Debtors Rs. 17,000 stock at 90% of book value Building Rs. 35,000. Plant Rs. 11500, Motor Van Rs. 29500 and outstanding expenses Rs. 18,000.

3. Amba and Manoh contributed additional capital of Rs. 20,000 and Rs. 10000 respectively.

4. Balance due to Mr. Pai is transferred to his loan account after paying him Rs. 1000.

Prepare: Profit and loss Adjustment A/c, Partner’s Capital A/c and balance Sheet of new firm.

Q4. On 1^st March, 2013. Ramchandra sold goods to Raman worth Rs. 8,000/- and Raman accepted the Bill for Rs. 8,000/- at 3 months drawn by Ramchandra. Ramchandra discounted the bill with his bank @ 6% p.a. On due date the bill was dishonoured and Raman requested Ramchandra to accept Rs. 4,000/- immediately and draw upon him a new bill for the remaining amount at 3 months together with an interest @ 10% p.a. Ramchandra agreed. The second Bill was duly honoured. Give Journal entries in the books of Ramchandra.

[10 MARKS]

Q5. X and Y are equal partners. The following is their Balance Sheet as on 31st March, 2012. [10 MARKS]

[Ans. Realisation A/c Loss :18,000, Amount paid to X = 35000 Y = 8000 bank A/c Total = 61500]

Liabilities	Rs.	Rs.	Assets	Rs.	Rs.
X’s Capital Y’s Capital Reserve Fund X’s Loan Creditors		40000 30000 8000 2000 15000	Building Machinery Furniture Debtors Less: R.D.D. Stock Investments Commission REceivable Bank	8800 - 800	30000 10000 12000 8000 20000 4000 1000 10000
		95000			95000

The firm was dissolved on 31st March, 2012

(i) The Assets realised as follows:

Stock Rs. 19,000, Debtors Rs. 7,500, Machinery Rs. 11,000, Building Rs. 14,000

ii. Y took over the investments Rs. 5000 and Furniture at Book Value.

iii. X agreed to accept Rs. 1500 in full settlement of his Loan Account.

iv. Dissolution expenses amounted to Rs. 2000.

v. Commission Receivable could not be recovered.

Prepare Realisation Account, X’s Loan Account, Capital Accounts and Bank Account.

ABC Industries Co. Ltd issued 15000 equity shares of Rs. 100 each. Payable as follows:

On Application : Rs. 20, On Allotment : Rs. 30. On First Call : Rs. 25. On Second call :Rs: 25

The company received application for 12000 shares. All the applications were accepted and shares were allotted. The company made both calls.

One shareholding holding 400 shares failed to pay the final call. His shares were forfeited.

Pass journal entries in the books of ABC industries Co. Ltd.

Q6. Dr. Subhash Raje started practice as a medical practitioner on 1^st April, 2007. He gives you the Receipts & Payments Accounts for the year 2007 – 08 and the adjustments to be made. Prepare his Income and Expenditure Account and Balance sheet for 2007 -08.

[Ans.

Surplus 80800

Tally 148200

Receipts and payments account for the year ended 31^st March, 2008.

*Receipts*	*Amount*	*Payments*	Amount
To Cash Introduced To Visits To Receipts From Dispensary To Sundry Receipts	107500 84000 64000 12000	By Furniture By Equipment By Drugs By Salary By Rent By Conveyances By Stationery By Lighting By Journals By Drawings By Balance c/f	50000 40000 35000 24000 6000 18000 5600 10000 1200 37700 40000
	267500		267500

Adjustments:

1. Receipts in arrears are: Visits Rs. 11,500 and Dispensary Rs. 9,000.

2. The outstanding salaries are Rs. 1,800 and the outstanding expenses on drugs are also Rs. 3,000.

3. 40% of the amount spent on conveyance was for domestic use.

4. Stock of drugs in hand at the close of the year was worth Rs. 4,200.

5. Depreciate furniture at 5% p.a. and equipments at 10% p.a. Furniture and equipment purchased on 1^st April 2007.

Q7. Misha and Latha are partners sharing profits and losses in the ratio of 2 : 1. From the following Trial Balance prepare Trading and Profit and loss account for the year ending 31^st December, 2004.

[Ans.]

G.P. 28100

N.P 12154

Partner's Capital Account 68103-33951

Tally 133855

Trial Balance as on 31.12.2004

*Particulars*	*Debit (Rs.)*	Credit (Rs.)
Stock (1^st January) Sundry Debtors Bills payable Purchases Wages Returns Outward Salaries Office Expenses Insurance Plant & Machinery Sundry Creditors Rent Sales Reserve for Doubtful Debts Travelling Expenses Returns Inward Land and Building Bills Receivable Bank Misha’s capital Latha’s capital	10, 000 28, 000 40, 000 8, 500 2, 700 2, 446 1, 300 30, 000 1, 800 1, 400 3, 500 44, 800 3, 400 6, 655	10, 101 2, 500 21, 500 60, 000 400 60, 000 30, 000
	1, 84, 501	1, 84, 501

Adjustments:

1. Closing stock was valued at Rs. 26,500.

2. Provide 10% Depreciation on Plant and Machinery.

3. Goods worth Rs. 1000 were distributed as free samples.

4. Prepaid Insurance Rs. 300.

5. Maintain Reserve for Doubtful debts at 1% of Sundry debtors.

6. Outstanding rent for the current year Rs. 200.

7. Goods worth Rs. 100 were taken over by Latha for her personal use, but no entry is made in the books.

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ACCOUNTS PAPER TWO