ST. JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)

END SEMESTER EXAMINATION – SEPT/OCT. 2015

B.COM.(Regular) – I SEMESTER

C1 15MC101: FINANCIAL ACCOUNTING

Duration: 3 Hours Max. Marks: 100

SECTION – A

Answer ALL the questions. Each carries 2 marks. (10×2=20)

What is a Trial Balance? What does it indicate?

What is Business Entity Concept?

What is Error of Principle? Give an example.

Mention any four methods of charging depreciation.

Mention the three fundamental accounting assumptions?

X Ltd., a dealer in second hand cars has the following five vehicles of different models and makes in their stock at the end of the financial year 2014-15:

Car	Fiat	Ambassdor	Maruthi Esteem	Maruthi 800	Zen
Cost (Rs.)	90,000	1,35,000	2,75,000	1,26,000	2,10,000
Net Realizable Value (Rs.)	1,05,000	1,55,000	2,65,000	1,25,000	2,08,000

Find the value of stock included in the balance sheet of the company as on 31^st March 2015.

In the year 2014-15, C Ltd. purchased a new machinery and made the following payments in relation to it:

Particulars	Rs.	Rs.
Cost as per supplier’s list	5,20,000
Less: Agreed discount	20,000	5,00,000
Delivery charges		15,000
Erection Charges		25,000
Annual Maintenance Charges		5,000

Determine the cost of the machine to be debited to Machinery Account.

Wages paid for the installation of Machinery Rs. 1,500 is debited to wages account. Pass the rectification entry.

Purchased goods worth Rs. 1,00,000 at a trade discount of 20% and a Cash discount of 5% from Mr. Anesh Shetty. 40% payment is made immediately. Journalize the transaction.

10.

If original cost of the asset is Rs. 18,80,000; its scrap value is Rs. 50,000 and its estimated useful life is 15 years, then what is the annual depreciation under straight line method?

SECTION – B

II)

Answer any FOUR questions. Each carries 5 marks. (4×5=20)

11.

Mention the differences between Tangible and Intangible Fixed Assets.

12.

Rectify the following errors:

a	Goods for Rs. 8,000 were purchased from Modern Traders on credit, but no entry has yet been passed.
b	Machinery purchased for Rs. 10,000 was wrongly passed through purchase book.
c	Cash paid to Ram Rs. 400 was debited to the account of Shyam.
d	Goods sold to Ajay for Rs. 2,600 were recorded in Purchases Book by mistake.
e	Sale of old chairs and tables for Rs. 8,000 were treated as sale of goods.

13.

Under what headings and sub-headings will you show the following items in the Balance Sheet of the Company?

1. Patents	2. Computers
3. Unclaimed Dividend	4. Prepaid Expenses
5. Securities Premium	6. Computer Software
7. Loose Tools	8. Capital Reserve
Provision for tax	Debit balance in the statement of Profit and Loss

14.

State whether the following transactions are capital expenditure, deferred revenue expenditure or revenue expenditure. Give reasons:

a	A sum of Rs. 40,000 was spent in overhauling its entire plant which resulted in adding five years to its working life.
b	Rs.2,00,000 were spent on advertising in connection with the introduction of a new product in the market.
c	Rs. 5,200 spent on repairs and maintenance of an old car.
d	A sum of Rs. 4,000 was spent on white-washing and painting the new factory.
e	Carriage paid on goods purchased.

15.

Consider the following information pertaining to G & Sons as on March 31^st 2015.

Particulars	Rs.
Opening Inventory	15,00,000
Purchases during the year 2014-15	45,00,000
Wages	1,55,000
Carriage Inwards	25,000
Carriage Outwards	12,500
Other Direct Expenses	3,500
Sales during the year 2014-15	50,00,000

As per physical inventory taken on March 31^st, 2015 the closing inventory was Rs. 18,90,000. Gross Profit on Cost has remained constant at 25%. The management of the firm suspects that some inventory might have been taken away by a new employee. Estimate cost of missing inventory on the close of the financial year and the cost of goods sold during the year.

16.

Abhilash Ltd. earned a profit of Rs. 38,00,000 for the year ending 31^st March, 2015. Rs. 13,80,000 profit was brought forward from last year to this year. Following recommendations were made by the directors of the company to appropriate this profit:

a. To pay Rs. 1,80,000 as bonus to employees of the company.

b. To transfer to General Reserve Rs. 9,40,000.

c. To propose dividend at 15% on the Equity shares.

d. To transfer Rs. 25,000 to Staff Gratuity Fund.

e. To transfer Rs. 70,000 to Development Rebate Reserve.

f. To transfer Rs. 2,20,000 to Capital Redemption Reserve.

g. To transfer Rs. 80,000 to dividend equalization reserve.

h. To transfer Rs. 70,000 to debenture redemption fund account

i. Transfer Rs. 50,000 from exempt profit reserve account to profit and loss appropriation account.

j. Provide for Corporate Dividend Tax at 20.358%.

Company’s Capital consisted of 2,00,000 Equity Shares of Rs. 10 each fully called up (Calls in arrears Rs. 20,000). Prepare Profit and Loss Appropriation Statement for the year ended 31^st March, 2015.

SECTION – C

III)

Answer any THREE questions. Each carries 15 marks. (3×15=45)

17.

Prepare Trading and Profit & Loss A/c for the year ending 31.03.2015 and the Balance Sheet as on 31.03.2015 from the Trial Balance taking into consideration the adjustment given below:

Particulars	Debit	Particulars	Credit
Op. stock	1,50,000	Op. Provision for Doubtful Debts	3,970
Advertisement	30,000	Returns Outwards	3,800
Building	2,00,000	Commission Received	12,000
Machinery	1,50,000	Interest Received	1,200
Debtors	1,20,000	Sales	21,00,500
Cash	12,500	Creditors	1,22,850
Bank	23,800	Bank Loan	15,500
Wages	22,000	Capital	2,60,000
Purchases	15,00,000
Freight Inwards	3,450
Freight Outwards	4,500
Bad Debts	2,580
Returns Inwards	12,000
Bank Charges	500
Land	2,60,000
Drawings	28,490
Total	25,19,820	Total	25,19,820

Adjustments:

1	Closing Stock at Cost is Rs. 1,50,000 and at Net Realizable Value is Rs. 1,45,000.
2	Interest due but not received Rs. 300.
3	Depreciate Building and Machinery at 10% p.a.
4	Further Bad debts is Rs. 1,500. Make a provision for doubtful debts at 3%.
5	Goods withdrawn by proprietor Rs. 10,000 for his personal use.
6	1/3 of the Advertisement expenses should be charged to P & L A/c.

18.

From the following details, prepare a stores ledger under:

a) FIFO Method and b) Weighted Average Method

Date	Particulars	Quantity in Nos.	Rate per unit (Rs.)
01.04.2015	Opening balance	500	150
03.04.2015	Purchases	100	160
05.04.2015	Issues	400	?
10.04.2015	Purchases	380	170
14.04.2015	Issues	260	?
16.04.2015	Purchases	250	180
28.04.2015	Issues	300	?

On physical verification, it was found that there is a shortage of 8 units on 22^nd April 2015. Assume this shortage as Normal.

19.

Prepare Balance Sheet at the end of each and every transaction.

a	Ram started business with Cash Rs. 2,50,000; Stock Rs. 5,00,000; Land & Building Rs. 4,00,000 and Creditors Rs. 2,50,000.
b	He sold goods costing Rs. 60,000 for Rs. 80,000.
c	He sold goods costing Rs. 1,00,000 for Rs. 1,25,000 to Y
d	Ram withdrew Rs. 5,000 for his personal use from office cash.
e	Sold goods worth Rs. 1,00,000 at a loss of Rs. 10,000 for cash.
f	Opened a bank account and deposited Rs. 50,000.
g	Received Commission Rs. 10,000.
h	Purchased goods worth Rs. 1,00,000 on credit from Ravi at a Trade Discount of 15% and cash discount of 3%. 60% payment made immediately in cash.
i	Paid salary Rs. 10,000 and Rs. 5,000 wages for the month.
j	Received an order for the supply of goods worth Rs. 10,000.

20.

From the following figures of X Co. Ltd., prepare a statement of Profit and Loss for the year ending 31^st March, 2015 as required by the Companies Act, 2013.

Particulars	Amount	Particulars	Amount
Salaries	2,25,000	Sales	33,17,000
Rent	72,000	Sales Returns	17,000
Telephone Charges	43,900	Discount allowed	3,000
Printing and Stationery	4,500	Profit on sale of Furniture	3,450
Freight outwards	22,980	Loss on sale of Machinery	2,450
Promotion Expenses	25,500	Sale of old newspapers	980
Depreciation on Machinery	2,800	Interest on Debenture	30,000
Goodwill written off	2,000	Discount Received	2,300
Purchases	25,87,000	General Expenses	3,900
Purchases returns	2,000	Other Incomes	900
Stock on 1.4.2014	45,000

Additional Information:

a. Inventory on 31.3.2015 is Rs. 55,000 (Net realizable value being Rs.53,000).

b. Unused stationery is worth Rs. 1,500.

c. Outstanding Salary is Rs. 2,000.

d. Rent prepaid is Rs. 3,000.

e. Provide Rs. 60,000 for current tax.

f. No. of Equity Shares of the Company since 1.4.2014 is 50,000.

21.

A Company purchased two machines for Rs. 20,00,000 on 1^st January, 2011. It purchased one more machine for Rs. 6,00,000 on 1^st March, 2012. It sold one machine on 1^st July, 2013 for Rs. 7,50,000 which was purchased on 1^st January, 2011 for Rs. 12,00,000 and on the same day purchased one more machine from the sale proceeds. On 30^th June 2014, the second machinery bought on 1^st January 2011 for Rs. 8,00,000 was auctioned at 40% of the book value on that date.

Depreciation was charged at 10% p.a. by diminishing balance method.

Prepare Machinery Account up to the year 31^st December, 2014.

Note: Accounts are closed on 31^st December every year.

SECTION – D

IV)

Case Study (1×15=15)

22.

a) Mr. Abijay, a recently qualified B.Com. Graduate, has come for a job opportunity at Alila Co. Ltd. The manager of the Co., gave him the following list of transactions and asked him to Pass Journal Entries. Mr. Abijay is unable to pass the entries and hence seeks your help. You are requested to pass the Journal Entries on his behalf.

i) Bought goods from Ram for Rs. 12,00,000 at a trade discount of 10% and cash discount of 2%. Paid 80% amount immediately.

ii) Alila Co. Ltd is a dealer in Computers. It purchased 3 computers worth Rs. 38,000 each for its own use and 10 computers worth Rs. 55,000 for the purpose of sale from Arvind Computec Ltd.

iii) Mahesh who owed us Rs. 10,000 was declared insolvent and only 40 paise in a rupee is recovered from him in full settlement of his account.

iv) Purchased goods for Rs. 20,000 from X and supplied it to Y for Rs. 26,000. Y returned goods worth Rs. 7,800 which in turn were returned to X.

v) Paid Salary Rs. 25,000; out of which Rs. 5,000 is prepaid.

vi) Wages paid Rs. 18,000 and wages outstanding Rs. 2,000.

vii) Received an order for the supply of goods worth Rs. 15,000.

(10 Marks)

b) Balance Sheet as at 18^th September, 2015.

Liabilities	Amount	Assets	Amount
Capital	12,00,000	Land and Building	10,00,000
Bank Loan	5,00,000	Furniture	3,50,000
Creditors	1,25,000	Cash at bank	2,50,000
Bills Payable	25,000	Stock	2,50,000
	18,50,000		18,50,000

Balance Sheet as at 19^th September, 2015.

Liabilities	Amount	Assets	Amount
Capital	12,50,000	Land and Building	10,00,000
Bank Loan	5,00,000	Furniture	3,50,000
Creditors	1,25,000	Cash at bank	2,25,000
		Stock	50,000
		Debtors	2,50,000
	18,75,000		18,75,000

Required:

i) You are to Analyze the above two Balance Sheets and mention the transactions that took place on 19^th September, 2015. (3 Marks)

ii) Prepare the Balance Sheet as at the end of 20^th September, 2015 if creditors were settled at a discount of 2,500 at the beginning of 20^th September, 2015.

(2 Marks)

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