# Loyola College B.Com Nov 2008 Financial Accounting Question Paper PDF Download

LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

# QB 01

B.Com. DEGREE EXAMINATION – COMMERCE

FIRST SEMESTER – November 2008

# CO 1500 – FINANCIAL ACCOUNTING

Date : 12-11-08                     Dept. No.                                        Max. : 100 Marks

Time : 1:00 – 4:00

SECTION     A

Answer ALL                                                                                    (10 x 2 = 20)

1. What are the limitations of single entry system.
2. State the advantages of departmental accounts.
3. State, with reasons in brief, whether the following statement is true or false : The provision for discount

on debtors is calculated after  deducting the provision for doubtful debts from debtors.

1. What is an average clause in a insurence policy?
2. Distinguish between straight line and diminishing balance methods of depreciation.
3. Give journal entries for the following: (i) Goods used for personal consumption- 5,000;

(ii) Stock destroyed by fire-Rs. 50,000-covered fully by insurance.

1. Calculate cash price of the asset taking into consideration the following particulars: Down payment

Rs. 15,000; first, second and third instalments at the end  of each  year Rs. 25,000, Rs. 25,000, and

Rs. 15,000  respectively.  Interest is reckoned at 10% p.a.

1. Find the amount of claim under average clause if a stock of Rs. 3,00,000 is insured for Rs. 2,00,000 and

the loss amounts to Rs. 1,50,000.

1. From the following particulars of Mr. Bhat, under single entry system, ascertain the total sales:

Opening stock Rs. 12,000, purchases  Rs. 60,000, wages Rs. 7,000 closing stock Rs. 15,000, the rate of

gross profit on sales  20%.

1. Madras Traders opened a branch at Bangalore on 1.1.2006. From the following particulars prepare

branch account in the books of Head Office: Goods sent to branch Rs. 20,500,  Cash sent to branch – for

salary Rs. 4,000; for rent Rs. 1,000, Goods returned by branch Rs. 2,000;  Cash received from branch

during the year Rs. 20,000; stock on 31st December  2006-Rs. 10,000.

SECTION    B

Answer any FIVE only                                                                     (5 x 8 = 40)

1. Explain the steps involved in arriving at the claim for loss of profits under consequential loss policy.
2. What do you understand by hire purchase? How does it differ from a purchase on instalment basis?

made by the firm itself out of the cloth supplied by the cloth  department at its usual selling price.  From

the following figures, prepare departmental trading and profit and loss account for the year ended 31st

March, 2004.

Opening Stock                                     Rs. 2,40,000                          Rs. 48,000

Purchases                                                 18,00,000                                 24,000

Sales                                                         20,00,000                              6,00,000

Manufacturing expenses                                  —                                     68,000

Selling expenses                                            40,000                                   4,000

Closing stock                                              3,00,000                                 60,000

The stock in readymade clothes department may be considered as consisting  80% cloth and rest as

other expenses.  The cloth department earned a gross profit of  25% in 2002-2003.

1. Show the relevant adjustment accounts in General Ledger under self-balancing Ledgers.

Rs.

Total balances of Trade Debtors as on 1st January, 2007                      18,700

Total balances of Trade Creditors as on 1st January, 2007                    23,560

Transaction during January 2001

Credit Sales                                                                                            19,700

Discount Allowed to Trade Debtors                                                           200

Credit Purchases                                                                                     25,560

Cash paid to Trade Creditors                                                                  28,800

1. Nila Ltd. which depreciates its machinery @ 10% per annum according to diminishing balance method,

had on 1st April, 2006 Rs. 4,86,000 balance in its machinery account. During the year ended 31st March,

2007, the machinery  purchased on 1st April, 2004for Rs. 60,000 was sold for Rs. 40,000 on 1st October,

2006 and a new machinery costing Rs. 70,000 was purchased and installed on the same date; installation

charges being Rs. 5000.

The Company wants to change its method of depreciation from diminishing  balance method to

straight line method w.e.f. 1st April, 2004and adjust the difference  before 31st March, 2007, the rate of

depreciation remaining the same as before.

Show the machinery account for the year ended 31st March, 2007.

1. The Sandur Iron Co. has taken on lease a mine on a royalty of 50 paise per tonne of iron ore raised

with a minimum rent of Rs. 20,000 per year, and power to recoup shorworkings during the first four

years was as under:

1st year 10,000 tonnes,  2nd year 24,000 tonnes,  3rd year 40,000 tonnes,  4th year 90,000  tones.

Prepare Minimum Rent A/c, Royalty A/c, Shortworking A/c and Landlord’s A/c in the books of

the company.

1. Quick Movers Ltd. acquires two Motor Vans each costing Rs. 18,650 from Karnatak Motors Ltd. on

hire purchase system.  Payment to be made Rs. 10,000 down and the balance in three equal instalments

of Rs. 10,000 each at the end of each year.  The  interest charged is at 5% p.a.  Depreciation to be

provided is at 10% p.a. on diminishing balance method.

Quick Movers Ltd. after having paid the advance and the first instalment at the end of first year, failed

to pay the second instalment because of financial difficulties. Karnatak Motors Ltd. took possession of

theVans and sold them for Rs. 21,998 after spending Rs. 400 on repairs.

Write up the necessary ledger accounts in the books of Quick Movers Ltd.

1. Due to heavy fire in the godown of a company on 1st October, 2005, the entire stock was burnt except

some costing Rs. 35,000.  The books were, however,  saved.

From the information available it was found that:

• The Company’s average gross profit was 25% on sales.
• The stock on 31st March, 2005 valued at 10% above cost was Rs. 1,10,000.
• The purchases and sales from 1st April 2005, upto the date of fire were

Rs. 1,50,000 and Rs. 3,40,000 respectively.

• The wages for the period amounted to Rs. 72,000
• The company insured the stock for Rs. 60,000
• The policy had an average clause.

You are required to prepare a statement showing the amount of stock lost by fire and the amount

of claim to be lodged with the Insurance Company.

SECTION      C

Answer any TWO only                                                                                        (2 x 20 = 40)

1. Following is the trial balance of Nathan & Co. as on 31st March, 2007

Rs.                                Rs.

Capital Account                                                                            80,000

Drawing Account                                     6,000

Stock(1.4.2006)                                      45,000

Purchases                                             2,60,000

Sales                                                                                            3,10,000

Furniture                                                 10,000

Sundry Debtors                                       40,000

Freight and Octroi                                     4,600

Salaries                                                      5,500

Rent                                                           2,400

Commission                                                                                  1,300

Discount                                                       200

Creditors                                                                                      20,000

Cash in hand                                              5,200

Bank                                                           5,800

Goodwill(at cost)                                     20,000____________________

_4,12,200                       4,12,200__

• Stock on 31st March, 2007 was valued at Rs. 53,000
• Salaries paid have been only for 11 months
• Unexpired insurance included in the figure of Rs. 400 appearing in trial balance is Rs. 100
• Commission earned but not yet received amounting to Rs. 122 is to be recorded in books of account
• Provision for bad debts is to be brought upto 3% of sundry debtors.
• Manager is to be allowed a commission of 10% of net profits after charging such commission
• Furniture is depreciated @ 10% per annum .
• Only 1/4th of advertising expenses are to be written off.

Prepare trading and profit and loss account for the year ended 31st March, 2007and balance sheet as on that date

1. Southern Traders have opened a branch at Nagpur on 1.1.2000. The goods were sent by the head office

to the branch and invoiced at selling price to the branch which was 125% of the cost price of the head

office.  The following are the  particulars relating to transactions of Nagpur Branch.

Rs.              Rs.

Goods sent to Branch(at cost)                                                                2,80,800

Sales:  Cash                                                                     1,25,000

Credit                                                                    1,75,000         3,00,000

Cash collected from debtors                                                                   1,56,000

Discount allowed                                                                                         4,000

Stock on 31.12.2000

(at invoice price)                                                         55,000

Cash sent to branch for:

Wages                                                                                  3,000

Freight                                                                                11,000

Other expenses                                                                     6,000             20,000

Spoiled good written off(at invoice price)                                                      500

Prepare the necessary accounts in the books of Head Office under   Stock and Debtors System.

21.Shri Ramdas commenced business on 1 April, 2006 with a capital of Rs. 45,000  he immediately

purchased furniture of Rs. 24,000.  During the year he borrowed from his father a sum of Rs. 5,000.  He

had withdrawn Rs. 600 per month for his household expenses.  He had no bank account and all dealings

were in cash.  He did not maintain any books but following information is given:

Rs.

Sales(including cash sales of Rs. 30,000)                                 1,00,000

Purchases (including cash purchases of Rs. 10,000)                    75,000

Carriage inwards                                                                                700

Wages                                                                                                 300

Discount allowed to debtors                                                            1,200

Salaries                                                                                            6,200

He used goods worth Rs. 1,300 for his personal use and paid Rs. 500 to his son for

examination and college fees.

On 31st March 2007, his debtors were worth Rs. 21,000 and creditors Rs. 15,000.  Stock in trade was

valued at Rs. 10,000.  Furniture to be depreciated by 10% p.a.

Prepare Trading and Profit & Loss Account and the Balance Sheet for the year

ended 31st  March 2007.

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