Roll No…………………………
Total No. of Questions—6] [Total No. of Printed Pages—8
Time Allowed : 3 Hours Maximum Marks : 100
Answers to questions are to be given only in English except in the cases of candidates who
have opted for Hindi medium.
If a candidate who has not opted for Hindi medium, answers in Hindi, his answers in Hindi
will not be valued.
Answer all Questions
Wherever appropriate suitable assumptions should be made by the candidate.
Working notes should form part of the answer.
Marks
1. The following figures have been extracted from the Books of X Limited for the 20 (0)
year ended on 31.3.2004. You are required to prepare a cash flow statement.
(i) Net profit before taking into account Income Tax and Income from law
suits but after taking into Account the following items was Rs. 20 lakhs
:
(a) Depreciation on Fixed Assets Rs. 5 lakhs.
(b) Discount on issue of Debentures written off Rs. 30,000.
(c) Interest on Debentures paid Rs. 3,50,000.
Books value of investments Rs. 3 lakhs (Sale of Investments for
(d)
Rs. 3,20,000).
(e) Interest received on investments Rs. 60,000.
(f) Compensation received Rs. 90,000 by the company in a suit field.
(ii) Income tax paid during the year Rs. 10,50,000.
(iii) 15,000, 10% preference shares of Rs. 100 each were redeemed on
31.3.2004 at a premium of 5%. Further the company issued 50,000
equity shares of Rs. 10 each at a premium of 20% on 2.4.2003.
Dividend on preference shares were paid at the time of redemption.
Dividends paid for the year 2002-2003 Rs. 5 lakhs and Interim
(iv)
dividend paid Rs. 3 lakhs for the year 2003-04.
(v) Land was purchased on 2.4.2003 for Rs. 2,40,000 for which the
company issued 20,000 equity shares of Rs. 10 each at a premium of
20% to the land owner as consideration.
(vi) Current assets and Current liabilities in the beginning and at the end of
the years were as detailed below :
As on As on
31.3.2003 31.3.2004
Rs. Rs.
Stock 12,00,000 13,18,000
Sundry Debtors 2,08,000 2,13,100
Cash in hand 1,96,300 35,300
Bills receivable 50,000 40,000
Bills payable 45,000 40,000
Sundry Creditors 1,66,000 1,71,300
Outstanding expenses 75,000 81,800
2. From the following information calculate the amount of Provisions and 16 (0)
Contingencies and prepare Profit and Loss Account of Zed Bank Ltd. for the
year ended 31.3.2004 :
(Rs. in
'000)
Investment and Discount 8,860
(Includes interest accrued on
investments) 220
Other Income 2,720
Interest expended 2,830
Operating expenses 10
Interest accrued on Investment
Additional Information : (Rs. in '000)
(a) Rebate on bills discounted to be provided for 30
(b) Classification of Advances :
(i) Standard assets 4,000
(ii) Sub-standard assets 2,240
(iii) Doubtful assets - (fully unsecured) 390
(iv) Doubtful assets-covered fully by security
Less than 1 year 100
More than 1 year, but less than 3 years 600
(v) Loss assets 376
(c) Provide 35% of the profit towards provision for Taxation
(d) Transfer 20% of the profit to Statutory Reserve.
3. ABC Ltd. sells goods on Hire-purchase by adding 50% above cost from the 16 (0)
following particulars, prepare Hire-purchase Trading account to reveal the
profit for the year ended 31.3.2005 :
Rs.
1.4.2004 Instalments due but not collected 10,000
1.4.2004 Stock at shop (at cost) 36,000
1.4.2004 Instalment not yet due 18,000
31.3.2005 Stock at shop 40,000
31.3.2005 Instalment due but not collected 18,000
Others details :
Total installments became due 1,32,000
Goods purchased 1,20,000
Cash received from customers 1,21,000
Goods on which due installments could not be collected were repossessed
and valued at 30% below original cost. The vendor spent Rs. 500 on getting
goods overhauled and then sold for Rs. 2,800.
4. Following is the Balance Sheet of Mr. Brown as at 31st March, 2005. He has 16 (0)
filed a petition in the court for being declared as insolvent :
Liabilities Assets
Rs. Rs.
Capital 18,000 Goodwill 5,000
Bank Loan (secured by first Machinery 20,000
charge on Building) 80,000 Building 1,15,000
Loan from Finance Co., 30,000 Investment in shares 5,000
(Secured by second charge Furniture 7,000
on Building) Stock 9,000
Sundry Creditors 59,000 Debtors :
sales tax payable 8,000 Good 14,000
Loan from wife 5,000 Doubtful 8,000
Bad 2,000 24,000
Cash and Bank 15,000
2,00,000 2,00,000
Mr. Brown estimated that except the following, all tangible assets are
realisable :
(i) A machinery Rs. 5,000 included in the Balance Sheet has no value.
(ii) Debtors (unrealisable) Rs. 7,600
(iii) Non-moving stock Rs. 3,000
(iv) Useless furniture Rs. 4,000
(v) Investment has no value.
Further Information :
(i) Building expected to realise Rs. 1,20,000
(ii) Loan was given by his wife from her personal sources.
(iii) A bill discounted for Rs. 10,000 is likely to be dishonoured.
(iv) One creditor forgoes his claim for Rs. 4,000
(v) Mr. Brown started his business on 1.4.2001. His household expenses
upto 31.3.2005 is Rs. 48,000. His private Life Insurance Policy matured
for Rs. 30,000 on 31.3.2005.
He made profit of Rs. 40,000 upto 31.3.2003.
He incurred loss of Rs. 50,000 from 1.4.2003 to 31.3.2005.
Also, he suffered speculation loss of Rs.10,000 in the year ended
31.3.2005.
Based on the above information, prepare Statement of Affairs of Mr. Brown as
on 31.3.2005 and Deficiency Account.
5. Exe Limited was wound up on 31.3.2004 and its Balance Sheet as on that 16 (0)
date was given below :
Balance Sheet of Exe Limited as on 31.3.2004
Liabilities Rs Assets Rs.
Share Capital Fixed assets 9,64,000
1,20,000 Equity Current assets
Shares of Rs.10
12,00,000 Stock 7,75,000
each
Reserves and Sundry Drs.
Surplus 1,60,000
Profit prior to
42,000 Less P.D.D 8,000 1,52,000
Incorporation
Contingency
2,70,000 Bills Receivable 30,000
Reserve
Profit and Loss
2,52,000 Cash at bank 3,29,000 12,86,00
A/c
Current Liabilities
Bills payable 40,000
sundry creditors 2,26,000
Provisions :
Provision for
2,20,000
Income tax
22,50,000 22,50,000
Mr. Brown estimated that except the following, all tangible assets are
realisable :
Fixed assets Rs. 12,80,000, Stock Rs. 7,70,000 and Bills Receivable Rs.
30,000.
Purchase consideration was settled by Wye Limited as under :
Rs. 5,10,000 of the consideration was satisfied by the allotment of fully
paid 10% Preference shares of Rs. 100 each. The balance was settled by
issuing equity shares of Rs.10 each at Rs.8 per share paid up.
Sundry debtors realised Rs. 1,50,000. Bills payable was settled for Rs.
38,000.Income tax authorities fixed the taxation liability at Rs. 2,22,000.
Creditors were finally settled with the cash remaining after meeting
liquidation expenses amounting to Rs. 8,000.
You are required to :
Calculate the number of equity shares and preference shares to be
(i)
allotted by Wye Limited indischarge of purchase consideration.
Prepare the Realisation account, Cash/Bank account, Equity
(ii) Shareholders account and Wye Limited account in the books of Exe
Limited.
(iii) Pass journal entries in the books of Wye Limited.
6. Answer any four of the following : 4x4=16
(a) A major fire has damageed assets in a factory of X Co. Ltd. on 8.4.2004, (0)
8 days after the year end closure of account. The loss is estimated to be
Rs. 16 crores (after estimating the recoverable amount of Rs. 24 crores
from the Insurance Company)
If the company had no insurance cover, the loss due to fire would be Rs.
40 crores.
(b) A Company had deferred research and development cost of Rs. 150 (0)
lakhs. Sales expected in the subsequent years are as under :
Years Sales
(Rs. in lakhs)
I 400
II 300
III 200
IV 100
You are asked to suggest how should Research and Development cost is
to be charged to Profit and Loss account.
If at the end of the III year, it is felt that no further benefit will accrue in
the IV year, how the unamoritsed expenditure would be dealt with in the
accounts of the Company?
(c) In April, 2004 a Limited Company issued 1,20,000 equity shares of Rs. (0)
100 each. Rs.50 per share was called up on that date which was paid by
all shareholders. The remaining Rs. 50 was called up on 1.9.2004. All
shareholders paid the sum in September, 2004, except on shareholder
having 24,000 shares. The net profit for the year ended 31.3.2005 is Rs.
2,64,000 after dividend on preference shares and dividend distribution
tax of Rs. 64,000.
Compute basic EPS for the year ended 31.3.2005 as per Accounting
Standard 20.
(d) (i) Mr. Raj a relative of key Management personnel received (0)
remuneration of Rs. 2,50,000 for his services in the company for the
period from 1.4.2004 to 30.6.2004.On 1.7.2004 he left the service.
Should the relative be identified as at the closing date i.e. on
31.3.2005 for the purposes of AS-18 ?
(ii) X Ltd. sold goods to its associate Company for the 1st quarter
ending 30.6.3004.After that, the related party relationship ceased to
exist. However, goods were supplied as was supplied to any other
ordinary customer. Decide whether transactions of the entire year
has to be disclosed as related party transaction.
(e) What are the main principle of allocation between Capital and Revenue (0)
accounts on a Capital scheme?
(f) On 1.4.2001 ABC Ltd. received Government grant of Rs. 300 lakhs for (0)
acquisition of a machinery costing Rs. 1,500 lakhs. The grant was
credited to the cost of the asset. The life of the machinery is 5 years. The
machinery is depreciated at 20% on WDV basis. The Company had to
refund the grant in May 2004 due to non-fulfillment of certain conditions.
How you would deal with the refund of grant in the books of ABC Ltd. ?
