LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
B.B.A. DEGREE EXAMINATION – BUSINESS ADMINISTRATION
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SECOND SEMESTER – April 2009
BU 2501 / 2500 – FINANCIAL ACCOUNTING
Date & Time: 23/04/2009 / 1:00 – 4:00 Dept. No. Max. : 100 Marks
SECTION A
Answer ALL (10 x 2 = 20)
- State the objectives of providing depreciation.
- What is the difference between a branch and a department?
- Tick the correct answers:
(i) What type of account goodwill is? — Fictitious / Intangible
(ii) On which side of the balance sheet is unexpired insurance shown?–Assets / Liability
- State whether the following statement is true or false:
Interest on capital and salary to a sole trader are incomes and hence are shown on the
credit side of profit and loss account. Justify your answer.
- What is meant by average clause?
- How do you allocate the following expenses in departmental accounts:
(i) Carriage inwards
(ii) Advertising
(iii) Lighting
(iv) General manager’s salary
- Prepare branch account from the following figures:
Rs.
Stock on 1-4-2008 14,900
Goods sent to branch 80,700
Expenses for branch 3,560
Cash sales at the branch 1,10,330
Stock on 30-3-2009 18,640
- If the net profits and sales for the last accounting year are Rs. 15,000 and Rs.1,00,000 respectively and standing charges are Rs.15,000 out of which Rs. 5000 is uninsured, what is the gross profit ratio?
- From the following particulars of Mr. Bean, under single entry system, ascertain the total sales:
Opening stock Rs. 1,20,000, purchases Rs. 6,00,000 , wages Rs.70,000 , closing stock Rs. 1,50,000,
the rate of gross profit on sales 20%.
- From the following details find out the credit purchases :
Rs.
Cash Purchases 29,000
Creditors (opening) 20,000
Creditors (closing) 28,000
Allowances from creditors 800
Purchase returns 1,500
Cash paid to creditors 25,000
SECTION B
Answer any FIVE only (5 x 8 = 40)
- Explain the step to be taken to convert single entry on to double entry
12.. Explain the steps involved in arriving at the claim for loss of profits under consequential loss
policy.
- On 01.01.2004machinery was purchased for Rs. 80,000. On 01.07.2006 the
Machinery was replaced by new machinery costing Rs. 60,000 the vendor taking the old machine in part exchange at a valuation of Rs. 16,000. Show the machinery A/c upto 31.12.2007 assuming that the business charges depreciation @ 10% on the diminishing value of the machinery .
- Mr. Williams acquired vehicle from Moped Ltd. on hire purchase system on
1.1.1999 payable Rs. 1,000 down and the balance as under:
Rs. 1,300 at the end of first year.
Rs. 1,200 at the end of second year
Rs. 1,100 at the end of third year.
Interest is charged at 10% p.a. Write off depreciation at 20% on the diminishing balance method.
Ascertain the cash price and prepare vehicle account and Moped Ltd. account in the books of
Mr. Williams.
- The Sandur Iron Co. has taken on lease a mine on a royalty of Rs2 per tonne of iron ore raised
with a minimum rent of Rs. 40,000 per year, and power to recoup shorworkings during the first
three 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.
16.. Mr. Mano keeps his books of accounts under single entry system. His financial position on 31.12.2007and 31.12.2008 was as follows:
| Particulars: | 2007
Rs. |
2008
Rs. |
| Cash | 9,860 | 800 |
| Stock in trade | 38,520 | 57,020 |
| Plant & Machinery | 54,420 | 61,000 |
| Bills Receivable | – | 16,480 |
| Sundry Debtors | 24,840 | 43,940 |
| Sundry Creditors | 72,040 | 80,000 |
| Furniture | 4,960 | 5,220 |
| Drawings | – | 5,000 |
During the year he introduced additional capital of Rs. 20,000. From the above particulars prepare a statement of Profit and Loss of Mr.Madan for the year ended 31.12.2008.
- Due to heavy fire in the godown of a company on15.06.2000, the entire stock was burnt except
some costing Rs. 3,500. The books were, however, saved from which the following particulars
were obtained:
| Rs. | |
| Stock at cost 01.01.1999 | 36,750 |
| Stock at cost 31.12.1999 | 39,800 |
| Purchases for 1999 | 1,99,000 |
| Wages for 1999 | 23,200 |
| Sales for 1999 | 2,43,500 |
| Purchases from 01.01.2000 to 15.06.2000 | 81,000 |
| Sales from 01.01.2000 to 15.06.2000 | 1,15,600 |
- The wages for the period amounted to Rs. 7,200
- The company insured the stock for Rs. 20,000
- The policy had an average clause.
Prepare a statement of insurance claim.
- A merchant sells goods at hire purchase system, the price being cost plus 50%. From
The following prepare the hire purchase trading account for the year ending 31.12.2001:
Stock at the shop at cost pricing (opening) 10,000
Stock with the customers at hire purchase price(opening) 30,000
Installments due & unpaid (opening) 13,000
Cash received from customers during the year 1,00,000
Goods repossessed during the year(installments due Rs. 4,000)
Valued at 3,000
Goods sent to customers during the year at hire purchase price 1,20,000
Installments due and unpaid (closing) 35,000
Stock with customers at hire purchase price (closing) 21,000
Stock at the shop at cost (closing) 12,000
SECTION C
Answer any TWO only (2 x 20 = 40)
- Prepare Trading, Profit & Loss A/c and Balance Sheet from the following Trial Balance of M. Madan.
| Debit Balances | Rs. | Credit Balances | Rs. |
| Sundry Debtors | 92,000 | Madan’s Capital | 70,000 |
| Plant & Machinery | 20,000 | Purchase Returns | 2,600 |
| Interest | 430 | Sales | 2,50,000 |
| Rent, Rates, Taxes & Insurance | 5,600 | Sundry Creditors | 60,000 |
| Conveyance charges | 1,320 | Bank Overdraft | 20,000 |
| Wages | 7,000 | ||
| Sales Returns | 5,400 | ||
| Purchases | 1,50,000 | ||
| Opening Stock | 60,000 | ||
| Madan’s Drawings | 22,000 | ||
| Trade Expenses | 1,350 | ||
| Salaries | 11,200 | ||
| Advertising | 840 | ||
| Discount | 600 | ||
| Bad debits | 800 | ||
| Business premises | 12,000 | ||
| Furniture & Fixtures | 10,000 | ||
| Cash in hand | 2,060 | ||
| 4,02,600 | 4,02,600 |
Adjustments:
- Stock on hand on 31- 12 -06 ,Rs. 90,000
- Provide depreciation on premises at 2.5%; Plant & Machinery at 7.5% and furniture & Fixtures
at 10%.Write off Rs. 800 as further bad debts.
- Provide for doubtful debts at 5% on sundry debtors.
- Outstanding rent was Rs. 500 and outstanding wages Rs. 400. Prepaid insurance Rs. 300 .
- Bangalore head office has a branch at Chennai The goods are invoiced to the branch at cost
plus 50% . From the following particulars prepare the necessary accounts in the books of the head
office under “Stock and Debtors System”
Stock on 1.1.2008 (at invoice price) 12,000
Debtors on 1.1.2008 6,000
Goods sent to branch (at invoice price) 60,000
Cash sales 21,400
Credit sales 34,000
Cash received from debtors 29,200
Discount allowed to debtors 800
Goods returned from debtors 2,000
Goods returned by branch to head office 3,000
Cash sent to branch for: Salary 4,000
Rent 2,000
Sundry expenses 600 6,600
Deficit in goods at branch (at invoice price) 600
Stock on 31.12.2008 (at invoice price) 15,000
21.. From the following particulars furnished by a merchant who keeps his ledgers on self-balancing
system, prepare the Debtors Ledger Adjustment Account and Creditors Ledger Adjustment
Account as they would appear in General Ledger.
| 2007
Jan 1 Balance of Trade Debtors Balance of Trade Creditors Jan 31 Credit Sales Credit Purchases Returns Inwards Returns Outwards Received Cash from Debtors Discount allowed thereon Cash paid to Creditors Discount allowed by them Received Bills Receivable Accepted Bills Payable Allowances to Debtors Allowances from Creditors Transfer from creditors ledger to debtors ledger Bad Debts Bills Receivable dishonoured Interest charged on dishonoured bills Balance of Trade Creditors(Dr) |
Rs.
30,000 20,000 1,20,000 75,000 5,000 800 40,000 1,000 60,000 1,200 70,000 10,000 500 50 150 450 2,000 500 200
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