LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
B.Com. DEGREE EXAMINATION – COMMERCE
FIRST SEMESTER – NOVEMBER 2010
CO 1500 – FINANCIAL ACCOUNTING
Date : 10-11-10 Dept. No. Max. : 100 Marks
Time : 1:00 – 4:00
SECTION – A
Answer All questions: (10 x 2 = 20 Marks)
- What do you mean by cost of goods sold?
- Give the adjusting entries for the following appearing under the Trial balance:
(i) Prepaid Insurance (ii) Depreciation on Machinery
(iii) Closing stock (iv) Goods issued as samples
- Depreciation is a process of : (Choose the correct answer)
(a) Valuation of asset (b) Allocation of cost
(c) Both valuation of asset and allocation of cost (d) None of these
- Bills receivable endorsed are debited to: (Choose the correct answer)
(a) B/R A/c. (b) B/P A/c (c) debtors A/c. (d) Creditors A/c.
- Calculate the missing figure: Opening Capital Rs.1,50,000, Profits Rs.60,000,
Closing capital Rs.3,90,000, Drawings or Capital introduced Rs. ________.
- Explain the terms: Goods in Transit, Cash in Transit.
- What is ‘inter-departmental transfer’ and how is this treated in accounts?
- Calculate total interest when cash price is Rs.5,00,000 and down payment is Rs.1,25,000. Three annual instalments are of Rs.1,21,000, Rs.1,33,100 and Rs.1,46,410 are to be paid.
- What is minimum rent?
- It is given that short sales were Rs.2,04,000 and that of gross profit on sales was 25%. Hence the loss of profit will be equal to: (choose the correct answer)
(a) Rs.40,800 (b) Rs.51,000
(c) Rs.68,000 (d) Rs.55,000
SECTION – B
Answer any FIVE Questions: (5×8=40marks)
- State the features and defects of single entry system.
- What are the special terms used in hire-purchase? Explain in detail.
- Define depreciation. What factors do you consider for calculating depreciation?
- Gopal purchased a machine for Rs.8,000 on 1st April 2001. He spent Rs.3,500 on its repair and installation. Depreciation is written off @ 10% p.a. on the Diminishing balance Method. On 30th June 2004 the machine was found to be unsuitable and sold for Rs.6,500. Prepare the machine account from 2001 to 2004 assuming that the accounts are closed on 31st December every year.
- From the following details, write General Ledger adjustment accounts as on 31.12.2008.
Rs. Rs.
Debtors (1.1.2008) Dr 1,74,250 Bills accepted for Creditors 74,000
Debtors (1.1.2008) Cr 3,200 Discount allowed to debtors 2,150
Creditors(1.1.2008)Cr 2,74,080 Discount allowed to debtors
Creditors(1.1.2008) Dr 2,040 but later on disallowed 1,000
Purchases 2,52,000 Cash received from debtors 87,000
Sales 2,82,090 Discount allowed by creditors 10,200
Sales Returns 2,080 Cash paid to debtors 250
Purchases returns 7,140 Transfer from debtors to 12,420
Cash paid to Creditors 1,27,000 creditors ledger
Bills received from debtors 93,000 Cash purchases 43,200
Bills dishonoured 2,000 Cash sales 74,000
Bad debts written off 2,150
- From the data, prepare Departmental Trading, Profit & Loss account and thereafter the combined income account revealing the concern’s true result for the year ended 31.12.2008.
Dept. A Dept.B
Rs. Rs.
Stock (January) 40,000 –
Purchase from outside 2,00,000 20,000 Wages 10,000 1,000 Transfer of goods from Dept.A – 50,000
Stock (Dec 31st) at Cost of the Deptt. 30,000 10,000
Sale of outsiders 2,00,000 71,000
B’s entire stock represents goods from Deptt.A which transfers them at 25% above its cost. Administrative and selling expenses amount Rs.15,000 which are to be allocated between departments A and B in the ratio 4:1 respectively.
- Rajan took licence from Golden Flask Co. for production and sale of flasks at a royalty of Rs.0.50 per piece sold subject to a minimum rent of Rs.6000. short working is recoverable within 3 years of agreement. Pass journal entries in the books of Rajan.
Year I II III IV
Production 8000 11000 14000 6000
Closing Stock 2000 1600 3000 4000
- A fire occurred in the premises of a company on 15.10.2008. From the following data, ascertain the loss of stock and prepare a claim for Insurance.
Rs.
Stock on 1.1.2007 30,600
Purchases from 1.1.2007 to 31.12.2007 1,22,000
Sales from 1.1.2007 to 31.12.2007 1,80,000
Stock on 31.12.2007 27,000
Purchases from 1.1.2008 to 15.10.2008 1,47,000
Sales from 1.1.2008 to 15.10.2008 1,50,000
Value of stock salvaged was 18,000
Amount of policy was 63,000
Stocks were always valued at 90% of cost
There was an average clause in the Policy.
SECTION – C
Answer any TWO Questions: (2×20=40marks)
- A head office invoices goods to its branch at cost plus 50%. Branch remits all cash received to the head office and all expenses are met by the H.O. From the following particulars, prepare the necessary accounts on the stock and debtors system to show the Profit or loss at the branch.
Rs. Rs.
Stock on 1.1.2008 27,900 Goods returned by debtors 3600
(Invoice price)
Debtors on 1.1.2008 20,400 Goods returned to H.O.by branch 4500
Goods invoice to the Shortage of stock 1350
Branch (Invoice Price) 1,53,000 Discount allowed 600
Cash sales 75,000 Expenses at the branch 16200
Credit sales 93,000 Bad Debts 600
Cash collected from
Debtors 91,200
- Mohan purchased a machine on hire purchase system on 1.1.2008. The terms of payment are four annual instalment of Rs.12,690 at the end of each year. Interest is charged @ 5% and is included in the annual payment of Rs.12690. Show machinery account and hire vendor account in the books of Mohan who defaulted in the payment of the third yearly payment whereupon the vendor repossessed the machinery. Mohan provides depreciation on the machinery @ 10% p.a. on the reducing balance.
- The Position of Manohar’s business as on 1.1.2008 was as under: Sundry Creditors Rs.1,70,000 ; Freehold premises Rs.5,00,000 ; Stock Rs.2,50,000 ; Sundry debtors Rs.2,00,000; Furniture Rs.20,000.
An abstract of the cash book is appended below
Receipts Rs. Payments Rs.
Sundry Debtors 1,50,000 Overdraft(1.1.2008) 1,00,000
Cash sales 8,00,000 Expenses 5,00,000
Drawings 30,000
Sundry Creditors 2,00,000
Cash in hand 20,000
Cash at bank 1,00,000
9,50,000 9,50,000
The following additional information is available: Closing Stock Rs.3,00,000; Closing Debtors Rs.2,50,000 ; Closing Creditors Rs.1,20,000. No additions were made during the year to premises and furniture but they are to be depreciated @ 10% and 15% respectively. A bad debts provision of 2.5% is to be raised.
Prepare a Trading and profit and loss account for the year ended 31.12.2008, and a balance sheet as on that date.
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