2008 Allahabad University M.Com Commerce Advance Accounting Question paper
M.Com. DEGREE EXAMINATION, MAY 2008.
ADVANCED ACCOUNTING
Time : Three hours Maximum : 100 marks
PART A — (5 × 8 = 40 marks)
Answer any FIVE questions.
All questions carry equal marks.
1. Explain the various types of accounting convention.
2. Raman keeps his books on Single Entry basis. Prepare a statement of Affairs as on 31.10.05 and a statement of Profit or Loss for the period ending 31.10.2005.
Assets and liabilities
1.11.2004
31.10.2005
Rs.
Rs.
Bank Balance
(Cr.) 560
(Dr.) 350
Cash on hand
10
50
Debtors
4,500
3,600
Stock
2,700
2,900
Plant
4,000
4,000
Furniture
1,000
1,000
Raman had withdrawn Rs. 2,000 during the year and had introduced additional capital of Rs. 4,200 on 1.7.2005. A provision of 5% on Debtors necessary. Write off Depreciation on plant at 10% and furniture at 15%. Interest on capital is to be allowed at 5% p.a.
1.11.2004
31.10.2005
1,000
1,000
3. The Revenue Account of a life insurance company shows the life assurance fund on 31st March 2005 at Rs. 62,21,310 before taking into account the following items :
(a) Claims covered under reinsurance Rs. 12,000
(b) Bonus utilized in reduction of life insurance premium Rs. 4,500
(c) Interest accrued on securities Rs. 8,260
(d) Outstanding premium Rs. 5,410
(e) Claims intimated but not admitted Rs. 26,500
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4.A purchasing company agrees to issue three shares of
Rs. 10 each, Rs. 7 paid-up (quoted in the market at Rs. 15) for every five shares in the vendor company. Find the number and amount of shares to be issued by the purchasing company if the vendor company has Rs. 5,00,000 paid-up shares capital of
Rs. 10 each, Rs. 5 pai-up (quoted in the market at Rs. 8).
5.From the balance sheet given below prepare a consolidated balance sheet of X Co. Ltd. and its subsidiary
Y Co. Ltd. The interests of the minority shareholders of Y Co. Ltd. are to be shown in the consolidated balance sheet.
Balance sheet of X Co. Ltd. and Y Co. Ltd. as on 31.12.2005
Liabilities
Rs.
Rs.
Assets
R
Debtors
32,00,000
11,20,000
Cash at Bank
20,80,000
20,80,000
3,04,00,000
43,20,000
3,04,00,000
43,20,000
ion was as follows :
Liabilities
Rs.
Assets
Rs.
Sundry creditors
40,000
Cash in hand
20,000
A's Capital a/c
72,000
Other assets
80,000
B's Capital a/c
48,000
C's Capital a/c
8,000
D's Capital a/c
12,000
Profit and loss a/c
40,000
1,60,000
1,60,000
The other assets realized Rs. 70,000. C became insolvent and nothing could be collected from his estate. Close the books of the firm.
Ation on plant
1,500
(i)
Depreciation on office furniture
1,000
(j)
Bad debts
200
(k)
Stationery
1,500
(l)
Repair
1,000
(m)
General expenses
500
occupies a room in a hotel at Mumbai at 10 a.m. on 6th June 2004 at Rs. 500 for a stay of 24 hours or a part thereof. Calculate the amount payable by Mr. Raman in each of the following circumstances assuming that a service charge at 12% is also payable.
(a) If Mr. Raman checks out 7 p.m. on 6th June 2004 itself.
(b) If Mr. Raman checks out 8 a.m. on 7th June 2004
(c) If Mr. Raman checks out 3 p.m. on 7th June 2004 and
(d) If Mr. Raman checks out 9 a.m. on 8th June 2004.
PART B — (4 × 15 = 60 marks)
Answer any FOUR questions.
9.X Co. Ltd. agreed to acquire the assets excluding cash as on 31st December, 2005 of Y Co. Ltd. The balance sheet of Y Co. Ltd. as on that date was as given :
Balance sheet
Liabilities
Rs.
Assets
Rs.
Equity capital
Goodwill
60,000
(Shares of Rs. 10 each)
3,00,000
Land and buildings
1,20,000
General Reserve
80,000
Plant and Machinery
2,00,000
Debentures
50,000
Stock
80,000
Creditors
10,000
Debtors
30,000
Profit and loss account
60,000
Cash
10,000
5,00,000
5,00,000
The consideration was as follows :
(a) A cash payment of Rs. 4 for every share of Y Ltd.
(b) The issue of one share of Rs. 10 each (Market value Rs. 12.50) in the X Co. Ltd. for every share in Y Ltd.
(c) The issue of 1,100 debentures of Rs. 50 each in X Co. Ltd. to enable Y Ltd. discharge its debentures at a premium of 10%.
(d) The expenses of liquidation of Y Ltd. amounting to Rs. 4,000 was to be met by themselves. Give the journal entries in the books of both the companies.
00
10.From the following balances of New General Insurance Co. Ltd. as on 31st December 2005 prepare (a) Fire revenue account (b) Marine revenue account.
Particulars
Rs.
Particulars
Rs.
Survey expenses (fire)
10,000
Commission earned on
Additional reserve opening
reinsurance ceded
(fire)
50,000
(marine)
60,000
Commission paid (marine)
1,08,000
Commission earned on
Commission paid (fire)
90,000
reinsurance ceded
Claims paid and
(fire)
30,000
outstanding (marine)
3,80,000
Management expenses
Claims paid and
(fire)
1,45,000
outstanding (fire)
1,80,000
Management expenses
Fire fund – opening
2,50,000
(marine)
4,00,000
Marine fund – opening
8,20,000
Marine premium less
Bad debts recovered
1,200
reinsurance
10,80,000
Share transfer fee
800
Fire premium less
Directors fees
5,000
reinsurance
6,00,000
Auditors fees
1,200
Profit on sale of land
60,000
Bad debts (marine)
12,000
Misc. Receipts
5,000
Bad debts (fire)
5,000
Difference in
exchange (Cr.)
300
Int. Divident etc.
received
14,000
Depreciation
35,000
In addition to usual reserves, additional reserve in case of fire insurance is to be increased by 5% of net premium.
11.The following Trial Balance of Arun as at 31st Dec. 2005 is given to you. Prepare Final Accounts.
Debit Balances
Rs.
Credit Balances
Rs.
Opening Stock
15,000
Capital
90,000
Land and Buildings
35,000
Sundry Creditors
9,600
Machinery
50,000
Purchase returns
2,100
Furniture and Fixtures
5,000
Sundry incomes
1,200
Purchases
1,06,000
Reserve for bad debts
300
Salaries
11,000
Sales
2,07,000
General expenses
2,500
Rent
3,000
Postage and telegram
1,400
Stationery
1,300
Wages
26,000
Freight on purchases
2,800
Carriage on sales
4,000
Repairs
4,500
Sundry debtors
30,000
Bad debts
1,100
Cash in hand
100
Cash in bank
6,400
Sales returns
5,100
3,10,200
3,10,200
Adjustments :
(a) Wages outstanding Rs. 2,100
(b) Depreciate : Land and buildings 2%, Machinery 10% and Furniture and Fixtures 15%
(c) Closing Stock value Rs. 14,900.
2,100
5,000
1,200
1,06,000
300
11,000
2,07,000
2,500
3,000
1,400
1,300
T¼
26,000
2,800
4,000
4,500
30,000
1,100
100
6,400
5,100
,310,200
12.Banu, Priya and Anu were in partnership sharing Profit and losses in the ratio of 3 : 2 : 1. On 1st January 2005 Priya retired. On that date the Balance Sheet was as follows :
Liabilities
Rs.
Assets
Rs.
Bills payable
5,000
Machinery
30,000
Outstanding
Parents
3,000
liabilities
20000
Debtors
10,000
Trade creditors
7,000
Less :
Reserve
3,000
provision
500
9,500
Capitals :
Stock
11,000
Banu
15,000
Cash
500
Priya
12,000
Anu
10,000
37,000
54,000
54,000
The terms were :
(a) Goodwill was to be valued at Rs. 12,000
(b) Outstanding liabilities to be brought down to
Rs. 1,500; Machinery is to be valued at 10% less than the book value and patents at Rs. 4,000.
(c) The total capital of the newly constituted firm was fixed at Rs. 30,000 to be contributed by the partners in the profit sharing ratio. Pass the journal entries to show the effect of the retirement and give the new Balance sheet of the firm after retirement.
5,000
30,000
3,000
2,000
10,000
500
9,500
7,000
11,000
3,000
500
15,000
12,000
10,000
37,000
54,000
13.The Balance sheet of Sharma Co. Ltd. as on 31st December 2005 was as follows :
Liabilities
Rs.
Assets
Rs.
Share capital :
Premises
6,60,000
40,000 pref. shares of
Plant
3,50,000
Rs. 10 each
4,00,000
Loose tools
1,00,000
1,20,000 equity shares
Stock
80,000
of Rs. 5 each
6,00,000
Debtors
1,20,000
Reserve
2,000
Bills receivable
40,000
9% Debentures
2,40,000
Cash
12,000
Creditors
4,00,000
Goodwill
2,40,000
Profit and Loss a/c
40,000
16,42,000
16,42,000
Additional information :
Upon revaluation, it was considered that the entire goodwill was worthless. Scheme of rearrangement and reduction of capital was agreed to by the court and the creditors on the following lines :
(a) That the creditors should accept 9% debentures to the extent of half of their debts, the balance to be settled by payment of cash at 90%.
(b) That the preference shares be reduced to shares of Rs. 5 each fully paid.
(c) That the equity shares be reduced to Re. 1 each.
Pass necessary journal entries and prepare Balance sheet after rearrangement.
6,60,000
40,000
3,50,000
4,00,000
1,00,000
1,20,000
80,000
6,00,000
1,20,000
2,000
40,000
2,40,000
12,000
4,00,000
2,40,000
40,000
16,42,000
16,42,000
14.XY private Ltd. was incorporated on 1.7.2005 to take over the business carried on by PQ and Co as a going concern with effect from 1.4.2005, the following is the P & L account for the year ended 31.3.2006 of XY Private Ltd. :
Rs.
Rs.
To Administrative
By G. Profit b/d
7,50,000
expenses
1,80,000
To Director's fees
30,000
To Selling expenses
3,60,000
To Audit fee
10,000
To Preliminary expenses
30,000
To Net Profit
1,40,000
7,50,000
7,50,000
Sales Rs. 30,00,000 (upto 30.6.2005, Rs. 10,00,000). You are required to prepare a statement showing the profit earned prior to and after incorporation.
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