LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
B.Com. DEGREE EXAMINATION – CORPORATE SEC.
SECOND SEMESTER – APRIL 2011
BC 2501/BC 2500 – FINANCIAL ACCOUNTING
Date : 08-04-2011 Dept. No. Max. : 100 Marks
Time : 9:00 – 12:00
PART – A
Answer all the questions (10×2=20 Marks)
- Show the necessary entries to adjust the following:
- Outstanding salaries 1,200
- Prepaid insurance premium Rs.450
- A firm purchased a plant for Rs.40,000. Erection charges Rs.2,000. Effective life of the plant is 5 years.
Calculate the amount of depreciation per year under Straight Line Method.
- What is single entry system?
- What do you understand by “Self – Balancing System of Ledger”?
- The Calcutta Trading Co. Ltd. opened a branch at Bangalore on 1st April 1993. From the following
particulars, prepare Bangalore Branch Account in H.O. Books.
|Goods sent to Bangalore Branch||40,000|
|Cheque sent to Branch for:|
|Cash received from Branch||60,000|
|Stock on 31st March 1994||8,000|
|Petty cash on hand, 31st March 1994||150|
- From the following information, prepare a departmental Trading account of X Ltd., which has two
departments, A and B.
- What is Instalment purchase system?
- What is minimum rent?
- From the following, calculate the amount of claim in respect of fire occured in a business on
Sales from 1.4.02 to 31.12.02 Rs.12,00,000
Purchases from 1.4.02 to 31.12.02 Rs.8,00,000
Stock on 1.4.02 Rs.2,00,000
Gross profit 25% on sales.
- What is meant by loss of profit policy?
PART – B
Answer any FIVE questions (5×8=40 Marks)
- A second hand machinery was purchased on 1.1.2000 for Rs.30,000 and Rs.6,000 and Rs.4,000 were
spent on its repairs and erection respectively. On 1.7.2001, another machine was purchased for
Rs.26,000. On 1.7.2002, the first machine was sold for Rs.30,000. On the same day, one more machine
was bought for Rs.25,000. On 31.12.2002, the machine bought on 1.7.2001 was sold for Rs.23,000.
Accounts are closed on 31st December every year.
Depreciation is written off at 15% per annum on W.D.V. method, prepare machinery account for 3
years ending 31.12.02.
- From the following particulars, calculate total purchases:
|Opening balance of B/P||25,000|
|Opening balance of creditors||30,000|
|Closing balance of B/P||35,000|
|Closing balance of creditors||20,000|
|Cash paid to Creditors||1,51,000|
|B/P discharged during the year||44,500|
- 13. What is departmental Accounting? Distinguish between Department and Branch Accounting.
- 14. From the following details, set out the Hire Purchase Trading A/c in the books of a trader who sells a
number of articles of comparatively small value daily on the hire purchase system, showing his profit
on this department of the business for the year ended 31.12.88. For the purpose of charging his hire
purchase customers, he adds 60% to the cost of the goods.
|Stock in customers hands at selling price 31.12.88||1,620|
|Sale of goods on hire purchase during the year at selling price||6,534|
|Cash received from hire purchase customers at selling price||2,100|
|Stock in customers’ hand at selling price||4,674|
|Goods repossessed (Instalments due Rs.1,000) valued at||250|
- Mr. N wrote a book on Management and got it published with M/s Nachiar publications on the terms
that royalties will be paid @ Rs.5 per copy sold subject to a minimum amount of Rs.15,000 with a
right of recoupment of short workings over the first three years of the lease.
From the following prepare
(a) Royalties A/c and (b ) Mr. N’s A/c. The other details are:
Year No. of copies printed Closing stock
1991 2,000 100
1992 3,000 200
1993 4,000 400
1994 5,000 500
- A fire occurred in the premises of Winston on 15.3.2005 destroying his stock for which he maintained
no records. The following information was available from his books.
|Year||Sales (Rs.)||Gross Profit (Rs.)|
Value of stock on 1.1.2005 Rs.40,000
Purchases from 1.1.2005 to 15.3.2005 75,000
Sales from 1.1.2005 to 15.3.2005 80,000
Stock salvaged 5,000
Calculate the amount to be claimed from the insurance company.
- From the following particulars, prepare Trading and Profit and Loss A/c for the year ending 31.3.2006
and Balance Sheet as on 31.3.2006.
Trial Balance as on 31.3.2006
|Particulars||Dr. (Rs.)||Cr. (Rs.)|
|Cash in hand||5,000|
- The directors of Departmental Stores Ltd. wish to ascertain approximately, the net profit of the A, B
and C departments separately for the quarter ended 31.3.88. It is found impracticable actually to take
stock on that date but an adequate system of departmental accounts is in use and the normal rates of
gross profit for the departments concerned are 40%, 30% and 20% on turnover respectively. Indirect
expenses are charged in proportion to departmental turnover.
Following are the figures for each department:
|Stock as on 1.1.88||30,000||35,000||15,000|
|Purchases to March 31, 1988||35,000||37,500||23,500|
|Sales to March 31, 1988||60,000||50,000||30,000|
Total indirect expenses for the period (including those relating to other departments) were Rs.21,000 on total sales of Rs.4,20,000.
Prepare accounts showing gross profit and net profit after making provision for stock at 10% of the closing stock in respect of each department.
PART – C
Answer any TWO questions (2×20=40 Marks)
- From the following Trial Balance as on 31.3.2006 and the adjustments given, prepare Trading and
Profit and Loss A/c for the year ending 31.3.2006 and the Balance Sheet as on 31.3.2006.
|Particulars||Dr. (Rs.)||Cr. (Rs.)|
|Salaries||5,000||Provision for doubtful debts||500|
|Office rent||12,000||Provision for discount on debtors||100|
- Closing stock at the year end was Rs.30,000
- Further bad debts amounted to Rs.500
- 5% of the profit is to be appropriated for creating Reserve fund
- Create 5% provision for doubtful debts on debtors
- Create 2% provision for discount on debtors
- Create 1% reserve on creditors.
- A Company has two branches A and B. Goods are invoiced at cost plus 50%. Branch remits cash
received to the H.O. and all expenses are met by H.O. From the following particulars, prepare the
necessary accounts on the stock and debtors system, to show the profit earned at branches.
|Stock on 1.1.85 (invoice price)||9,300||15,600|
|Debtors on 1.1.1985||6,800||8,700|
|Goods invoiced to the branch (at cost)||34,000||36,000|
|Sales at branches:|
|Cash collected from debtors||30,400||29,800|
|Goods returned by debtors||1,200||1,500|
|Goods returned by branch to H.O.||1,500||–|
|Goods transfer from B|
|to A at invoice price||2,100||2,100|
|Shortage of Stock||450||–|
|Discount to customers||200||350|
|Expenses at branches||5,400||6,700|
|Surplus in stock||–||300|
- Fire occured in the premises of Bad Luck Co. Ltd. on 1.11.1990. The indemnity period lasted for 4
months during which the sales of the company were reduced to Rs.2,00,000 only. The company closes
its account on 30th June every year. The Profit and Loss A/c for the year ended 30th June 1990 is given
Dr. Profit and Loss A/c for the year ending 30.6.1990 Cr.
|To Opening Stock||5,00,000||By Sales||47,50,000|
|To Purchases||30,00,000||By Closing stock||2,50,000|
|To Variable expenses||7,87,500|
|To Standing charges||3,62,500|
|To Net Profit||3,50,000|
The company took a loss of profit policy for a sum of Rs.6,00,000. The sales of the company for the 12 months ending the date of fire were Rs.50,00,000 and for the months from 1.11.1989 to 28.2.1990 were Rs.15,00,000.
It was noted that the sales for the first four months of the year under indemnity were 20% higher than previous year. Compute the claim for loss of profit.
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