Accounting For Decision Making

The income statements of a concern are given for the year ending on 31^st December 2010 and 2011. Rearrange the figures in a comparative form the study the profitability position of the concern. ‘000

	2010 (Rs.)	2011 (Rs.)
Net sales	785	900
Cost of goods sold	450	500
General and administrative expenses	70	72
Selling expenses	80	90
Interest paid	25	30
Income tax	70	80

These are two similar factories under the same management. The management desires to merge these two plants. The following particulars are available:

	Factory I	Factory II
Capacity operation	100%	60%
Sales	300 lakhs	120 Lakhs
Variable costs	220 Lakhs	90 Lakhs
Fixed costs	40 Lakhs	20 Lakhs

You are required to calculate:

What would be the capacity of the merged plant to be operated for the purpose of Break-even?
ii) What would be the profitability on working at 75% of the merged capacity?
From the following forecasts of income and expenditure, prepare a cash budget for the months January and April, 2011: (Rs)

Months	Sales (credit)	Purchases (credit)	wages	Manufacturing expenses	Administrative expenses	Selling expenses
2007 November	30,000	15,000	3,000	1,150	1.060	500
December	35,000	20,000	3,200	1,225	1,040	550
2008 January	25,000	15,000	2,500	990	1,100	600
February	30,000	20,000	3,000	1,050	1,150	620
March	35,000	22,500	2,400	1,100	1,220	570
April	40,000	25,000	2,600	1,200	1,180	710

Additional information is as follows:

Customers are allowed a credit period of 2 months
A dividend of Rs. 10,000 is payable in April
Capital expenditure to be incurred: plant purchased on 15^th of January for Rs. 5,000; a Building has been purchased on 1^st March and the payments are to be made in monthly installments of Rs. 2,000 each
The creditors are allowing a credit of 2 months
Wages are paid on the 1^st of the next month
Lag in payment of other expenses in one month
Balance of cash in hand on 1^st January,2011 is Rs. 15,000

The following information at 50% capacity is given, prepare a flexible budget and forecast the profit and loss at 60%, 70% and 90% capacity:

	Expenses at 50% capacity
Fixed expenses: salaries	50,000
Rent and taxes	40,000
Depreciation	60,000
Administrative expenses	70,000
Variable expenses
Material	2,00,000
Labour	2,50,000
Others	40,000
Semi-variable expenses: Repairs	1,00,000
Indirect Labour	1,50,000
Others	90,000

It is estimated that fixed expenses will remain constant at all capacities. Semi-Variable expenses will not change between 45% and 60% capacity, will rise by 10% between 60% and 75% capacity, a further increase of 5% when capacity crosses 75%.

Estimated sales at various levels of capacity are:

Capacity. Sales (Rs.)

60% 11, 00,000

70% 13, 00,000

90% 15, 00,000.

Write a note on Activity based costing, life cycle costing and target costing.

Write journal entries for the following:

(1) Proprietor withdrew for his personal use cash Rs.2000 and goods worth RS.1000.

(2)Rs.1000 due from Rohit is now written off as bad debts.

(3)Rahul who owed us Rs.20,000 becomes insolvent and a final dividend of 60 paise in a rupee is received from his estate.

(4)Goods worth Rs.10,000 were destroyed by a fire. Insurance company admitted a claim for 60% amount.

(5)Goods worth Rs.5000 were distributed as free samples.

From the following list balances, extract from the books of Rakesh, prepare a trial balance as on 31/3/2005. The amount requires to balance should be entered as capital.

PARTICULARS

Purchases

Stock(1/4/2004)

Sales

Sundry expenses

Leasehold premises

Free hold premises

Return inward

Furniture &Fixtures

Equipment

Repairs to equipment

Depreciation

Bank

AMNT(Rs)

18,20,000

3,50,000

40,00,000

15,000

5,00,000

18,00,000

25,000

2,90,000

8,00,000

5000

80,000

34,600

PARTICULARS

Drawings

Sundry Debtors

Sundry Creditors

Bad debts

Investments (10%)

Interest-investments

Long term borrowings

Loan from UTI bank

Interest on loan

Petty cash A/C

Stock(31/3/2005)

AMNT(Rs)

60,000

3,60,000

1,20,000

10,000

2,00,000

20,000

6,00,000

8,00,000

65,000

400

4,60,000

M/s Raj and Co. purchased a machine for Rs.1,00,000. Estimated useful life and scrap value were 10 years and Rs.12000 respectively. The machine was put to use on 1/1/2006. Show the machinery A/C and depreciation A/C in their books for 2011 by using Sum of Years digits method.

Under what headings will you show the following items in the balance sheet of a company

(A) Interest accrued and due on unsecured loans

(B) Interest accrued and due on secured loans

(D) Mortgage Loan

(E) Government and trust securities

(F) Loose tools

(G) Live Stock

(H) General Reserve

(I) Capital Reserve

(J) Discount on issue of shares

Write short notes on any two:

(a) Going Concern Concept

(b) Money Measurement Concept

SECTION-B

II) Answer any three out of five questions: (3×15=45)

The following are the summarized balance sheets of Good Luck Ltd., as on 31^st December, 2010 and 31^st December 2011.

Liabilities	31^st Dece. 2010	31^st Dec 2011	Assets	31^st Dec. 2010	31^st Dec. 2011
Equity share capital	2,00,000	2,40,000	Land and buildings	1,05,000	1,50,000
8% Debentures	50,000	–	Plant and machinery ( at cost)	2,90,000	3,20,000
Share Premium		10,000	Furniture (at cost)	9,000	10,000
General reserve	30,000	50,000	Inventories	1,30,000	1,05,000
Profit and Loss account	48,000	68,000	Sundry debtors	75,000	85,000
Sundry Creditors	1,30,000	1,50,000	cash	15,000	26,000
Proposed Dividend	20,000	24,000
Provision for depreciation
Plant and machinery	1,40,000	1,50,000
Furniture	6,000	4,000
	6,24,000	6,96,000		6,24,000	6,96,000

Additional information is as follows:

Furniture which cost Rs. 5,000 written down value Rs. 1,000 was sold during the year 2011 for Rs. 2,000
Plant and machinery which cost Rs. 20,000 and in respect of which Rs. 13,000 had been written off as depreciation was sold during the year 2011 for Rs. 3,000
The dividend of 2010 was paid during 2011
You are required to prepare:

The statement of change in working capital during 2011

Funds flow statement for the year 2011.

A company finds on 1^st January, 2008 that it is short of funds with which to implement its programme of expansion. On 1^st January, 2007 it had a bank balance of Rs. 1.80,000. From the following information, prepare a statement for Board of directors, to show how the overdraft of Rs. 68,750 as at 31^st December, 2007, has arisen:

Figures as per balance sheet as at 31^st December of each year are as follows:

	2006 (Rs.)	2007 (Rs.)
Fixed assets	7,50,000	11,20,000
Stock and stores	1,90,000	3,30,000
Debtors	3,80,000	3,35,000
Bank balance	1,80,000	68,750 (overdraft)
Trade creditors	2,70,000	3,50,000
Share capital (in shares of Rs. 10 each)	2,50,000	3,00,000
Bills receivable	87,500	95,000

The profit for the year ended 31^st December, 2007 before charging depreciation and taxation amounted to Rs. 2, 40,000.
5,000 shares were issued on 31^st January, 2007 at a premium of Rs. 5 per share.
1, 37,500 were paid in March, 2007 by way of income tax. Dividend was paid as follows.

2006 (final) on the capital on 31-12-2006 at 10% less tax at 25%.

2007(interim) 5% free of tax

Given the following information for ABC Company at the end of 2011 determine balances for the income statement and the balance sheet:

Net sales Rs. 1, 00,000

Debtor’s turnover ratio based on net sales: 2

Inventory turnover ratio: 1.25

Fixed assets turnover ratio: 0.8

Debt-assets ratio: 0.6

Net profit margin: 5%

Gross profit margin: 25%

Return on assets: 2%

ABC Company

Income statement

(For the year ending Dec 31, 2011)

sales	Rs. 1,00,000
Cost of goods sold	………………..
Gross profit	………………..
Other expenses	………………..
Earnings before tax	………………..
taxes@50%	………………..
Earnings after tax	………………..

Balance sheet

As on 31^st Dec 2011

Liabilities	Rs.	Assets	Rs.
Equity	………………..	Net fixed assets	………………..
Long term debt	………………..	Inventory	………………..
Short term debt	50,000	Debtors	………………..
		Cash	………………..
Total	………………..	Total	………………..

On 1^st August 2010 a firm purchased 2 vehicles at Rs.3,00,000 each to serve for 10 years, at the end of which scrap value shall be 25% of the cost price. Another vehicle was purchased on 1^st October 2010 for Rs.4,00,000, charging depreciation at 10% on original cost. On 1^st January 2012, a new vehicle was acquired for Rs.4,20,000 to serve for 5 years. On 1^st July 2012 one vehicle which was purchased on 1^stAugust 2010, was auctioned at 20% of book value. Prepare the Vehicle A/C from 1^st August 2010 to 31/3/2013.

Books are closed on 31^st March every year.

Also prepare depreciation A/C for the above period.

Oil India is a bulk distributor of high octane petrol. A periodic inventory of petrol on

hand is taken when the books are closed at the end of each month. The following summary of information is available for the month of June 2008.

ITEMS:

Sales

General Administrative Cost

Opening Stock: 1,00,000 litres at Rs.3 per litre

Purchases (Including Freight) in:

June 1 – 2,00,000 litres

June 30 – 1,00,000 litres

Closing Stock on June 30^th – 1,30,000 litres

AMOUNT(Rs)

9,45,000

25,000

Rs.2.85/litre

Rs.3.03/litre

Compute the following data by FIFO, weighted average and LIFO method of inventory costing.

Value of inventory on June- 30^th
Amount of the goods of goods sold for June
Profit or loss for June

SECTION – C

III) Compulsory case study. (20 marks)

From the ratios given below, draw the profit and loss and the balance sheet of X Co. Ltd.,
Trading and profit and loss account

For the year ending 31^st December, 2010

To opening stock	4,80,000	By sales	……………
To purchases	……………	By closing stock	……………
To purchases expenses	40,000
To gross profit	……………
	……………		……………
To office expenses	2,40,000	By gross profit	……………
To selling expenses	1,86,000	By commission	……………
To interest on debentures	30,000
To provision for taxation	……………
To net profit	……………
	……………		……………
To proposed dividends	……………	By balance b/f	60,000
To transfer to general reserves	……………	By net profit this year	……………
To balance carried to balance sheet	……………
	……………		……………

Balance sheet

As at 31^st December 2010

Authorized share capital: 5,000 equity shares of Rs. 100 each	5,00,000	Fixed Assets
Issued, subscribed and paid up capital: 4,000 equity shares of issued, subscribed and Rs. 100 each fully paid.	4,00,000	Goodwill	72,000
Reserves and surplus		Land	3,00,000
Previous reserves	……………	Plant and machinery	2,00,000
Additions during the year	……………	Current assets
Balance of P/L A/c	……………	Stock in trade	……………
Secured loans:		Sundry debtors	……………
15% debentures of Rs. 100 each	……………	Bank balance	40,000
Current Liabilities	……………
	……………		……………

dividends proposed are 30% of share capital
current ratio 2:1
sundry debtors represents 2 months sales
stock turnover ratio 6 ^2/3 %
gross profit ratio 33 ^1/3 %
provisions for taxation is at 50% of profits
profit carried forward were 10% of the transfer to general reserve
transfer to general reserve was equivalent to proposed dividends
Secured loans were half of current liabilities.
Balance to the credit of general reserve at the beginning of the year was twice the amount transferred to that account from current profits. Workings should form part of your answer.

St. Joseph’s College of Commerce M.Com. 2014 I Sem Accounting For Decision Making Question Paper PDF Download

April 6, 2018 by prasant kumar

St. Joseph’s College of Commerce (Autonomous)

End Semester Examination – October 2014

MIB – I Semester

ACCOUNTING FOR DECISION MAKING

Duration: 3 hrs Max. Marks: 100

Section – A

Answer any SEVEN questions. Each carries 5 marks. (7 x 5 = 35)

From the following Balance Sheet of a Company, calculate the following ratio’s.

Current Ratio (2) Liquid Ratio

(3) Inventory Turnover Ratio

Liabilities		Assets
Share Capital	2,00,000	Goodwill	1,20,000
Reserves and Surplus	58,000	Plant and Machinery	1,50,000
Debentures	1,00,000	Stock	80,000
Creditors	40,000	Debtors	45,000
Bills payable	20,000	Cash	17,000
Other current liabilities	2,000	Miscellaneous Current Assets	8,000
	4,20,000		4,20,000

Additional Information:

Credit Sales for the year = Rs.4,00,000
Gross Profit = Rs.1,60,000

The following information at 50% capacity is given. Prepare a flexible budget and forecast the profit or loss at 60% capacity. Sales at 60% capacity =11,00,000.

Particulars	Expenses at 50% capacity (Rs.)
Fixed expenses:
Salaries	50,000
Rent & Taxes	40,000
Depreciation	60,000
Administrative Expenses	70,000
Variable Expenses:
Materials	2,00,000
Labour	2,50,000
Others	40,000
Semi Variable Expenses:
Repairs	1,00,000
Indirect Labour	1,50,000
Others	90,000

Additional Information:

Fixed expenses will remain fixed at all capacities
Semi variable expenses will not change between 45% and 60% capacity.

From the following information, calculate Funds From Operations

Profit and Loss Account

To Salaries	10,000	By Gross Profit	2,00,000
To Rent	3,000	By Profit on sale of machinery	5,000
To Commission	2,000	By Refund of tax	3,000
To Discount allowed	1,000	By Dividend received	2,000
To Provision for Dep	14,000
To Transfer to Gen Res	20,000
To Provision for tax	10,000
To Loss on sale of investments	5,000
To Discount on issue of Debentures	2,000
To Preliminary Expenses	3,000
To Selling Expenses	20,000
To Net Profit	1,20,000
	2,10,000		2,10,000

Calculate the trend percentages from the following figures of X Ltd., taking 2009 as the base year and interpret the result.

Year	Sales	Stock	Profit Before Tax
2009	1,881	709	321
2010	2,340	781	435
2011	2,655	816	458
2012	3,021	944	527
2013	3,768	1,154	672

Following are the receipts and issues of a raw material in Jatram Ltd., during May 2013.

1^st May	Opening balance 200 units worth Rs.7,000
3^rd May	Purchased 300 units at Rs.40 per unit
13^th May	Purchased 900 units at Rs.43 per unit
23^rd May	Purchased 600 units at Rs.38 per unit
5^th May	Issued 400 units
15^th May	Issued 600 units
25^th May	Issued 600 units

You are required to record the above transactions in Stores Ledger pricing the issues under Weighted Average Method.

Explain “Depreciation”, and its causes in the books of account. Explain Fixed and Reducing balance method of depreciation using your own examples.

Prepare daily Balance Sheet of Mr. X

1^st April	Commenced business with cash Rs.50,000/- Plant and Machinery Rs.1,00,000, Furniture Rs.20,000,Stock Rs.60,000 and Bank loan Rs.70,000
2^nd April	Sold goods costing Rs.10,000 at a profit of 15% on 3 months credit to Mr. Y
5^th April	Paid Rent Rs.5,000 and bought goods from Mr. Z worth Rs.10,000, receiving a trade discount @ 5%
10^th April	Incomes received in advance Rs.2000 and Prepaid expense Rs.1000
15^th April	Outstanding expenses Rs.10,000 and incomes due to be received Rs.2000

From the following trial balance of Hariprasad of Bombay (containing errors), prepare a correct trial balance.

	Dr.	Cr.
Purchases	60,000	–
Reserve Fund	20,000	–
Sales	–	1,00,000
Purchases Returns	1,000	–
Sales Returns	–	2,000
Opening Stock	30,000	–
Closing Stock	–	40,000
Expenses	–	20,000
O/s Expenses	2,000	–
Bank Balances	5,000	–
Assets	50,000	–
Debtors	–	80,000
Creditors	–	30,000
Capital	94,000	–
Suspense account being difference in books	10,000	–
	2,72,000	2,72,000

Briefly explain the following concepts:

Variance Analysis
ABC Costing

Find out the break – even point from the following:

Fixed cost Rs.40,000, variable cost Rs.2 per unit, selling price Rs.10 per unit.
It has been found that Rs. 80,000 will be the likely sales turnover for the next budget period. The Cost and Selling price will remain the same. Calculate the estimated contribution.
A profit target of Rs.30,000 has been budgeted. Calculate the turnover required.

Section – B

II) Answer THREE questions. Each carries 15 marks: (3 x 15 = 45)

From the following Balance Sheets of A Ltd., prepare:

Statement of Changes in the Working Capital: and
Funds Flow Statement

Liabilities	31.3.2012	31.3.2013	Assets	31.3.2012	31.3.2013
Equity Share Capital	6,00,000	8,00,000	Land and Buildings	1,80,000	2,20,000
Profit & Loss A/c	1,00,000	1,60,000	Plant and Machinery	5,00,000	8,00,000
General Reserve	50,000	70,000	Stock	1,00,000	85,000
Provision for Taxation	50,000	40,000	Bills Receivable	50,000	30,000
Sundry Creditors	1,10,000	1,30,000	Debtors	1,50,000	1,60,000
Bills Payable	80,000	90,000	Cash in Hand	20,000	20,000
Outstanding Rent	10,000	25,000
	10,00,000	13,15,000		10,00,000	13,15,000

Additional Information:

Depreciation on plant and machinery in 2013 Rs.50,000
A piece of machinery costing Rs.12,000 was sold for Rs.8,000 during 2013 (depreciation of Rs.7,000 had been provided on it)
An interim dividend of Rs.6,000 was paid during the year.
Income tax paid during 2013 Rs.45,000

Following is the balance sheet of AB Co Ltd as at 1/01/ 2013. And 31/12/ 2013

Liabilities	1/01/2013	31/12/2013	Assets	1/01/2013	31/12/2013
Equity share capital	3,00,000	3,50,000	Land & building	2,30,000	3,90,000
Share premium	_____	30,000	Plant & Machinery	85,400	1,40,000
General reserve	45,000	65,000	Furniture	5,500	6,500
Profit and loss	30,000	80,800	Stock	82,400	95,700
Debentures	______	70,000	Sundry debtors	75,000	85,500
Sundry creditors	85,000	90,700	Bank balance	34,200	44,300
Provision for taxation	22,500	40,500
Proposed dividend	30,000	35,000
	5,12,500	7,62,000		5,12,500	7,62,000

Additional Information:

Depreciation written off during the year.

Land and building Rs. 60,000

Plant and machinery Rs. 50,000

Furniture Rs. 1,200

Tax paid during the year Rs. 22,500 and dividend paid is Rs. 30,000

You are required to prepare a Cash Flow Statement.

A company has Rs.25,000 cash in hand on 1^st April 2014 and it requires you to prepare cash budget for the three months. April to June 2014. The following information is supplied to you

	Sales	Purchase	Wages	Expenses
	Rs.	Rs.	Rs.	Rs.
February	70,000	40,000	8,000	6,000
March	80,000	50,000	8,000	7,000
April	92,000	52,000	9,000	7,000
May	1,00,000	60,000	10,000	8,000
June	1,20,000	55,000	12,000	9,000

Other information:

Period of credit allowed by suppliers is two months:
25% of sale is for cash and the period of credit allowed to customers for credit sale is one month:
Delay in payment of wages and expenses one month.
Income tax Rs.25,000 to be paid in June 2014

A Company having a net working capital of Rs.2.8 lakhs as on 30^th June 2014 has the following financial ratios and performance figures

Current ratio	2.4
Liquidity ratio	1.6
Inventory turnover (on cost of sales)	8
Gross profit on sales	20%
Credit allowed (months)	1.5

The company’s fixed assets is equivalent to 90% of its net-worth (share capital plus reserves) while reserves amounted to 40% of share capital. Net worth is also equal to fixed assets plus working capital.

Prepare the Balance Sheet of the company as on 30-06-2014, showing step by step calculations.

Explain how marginal costing techniques can be used for taking managerial decisions.

Section – C

III) Compulsory Question (1 x 20 = 20 marks)

From the following information prepare comparative balance sheet. Comment on the financial position and interpret the result.

Balance Sheet

As on 31^st December

Particulars	2012	2013	Particulars	2012	2013
Equity Capital	6,857	6,862	Land & Building	3,772	4,719
Reserves	35,046	30,209	Plant & Machinery	17,291	22,391
Debentures	2,470	8,290	Furniture & Fixture	1,053	1,194
Loans	16,690	22,667	Vehicles	93	108
Non – Bank loans	14,754	14,302	Inventory	4,971	7,206
Creditor	3,629	5,804	Debtor	3,143	2,803
Provision for Dividend	651	–	Cash	4,784	4,784
Others	4,328	10,729	Bank	10,966	13,817
Tax Payable	8,302	9,564	Work-in-Progress	46,654	51,405
			(Fixed Assets)
	92,727	1,08,427		92,727	1,08,427

St. Joseph’s College of Commerce M.Com. 2015 I Sem Accounting For Decision Making Question Paper PDF Download

April 5, 2018 by prasant kumar

St. Joseph’s College of Commerce (Autonomous)

End Semester Examinations – Sept/Oct. 2015

M.COM(I.B.) – I SEMESTER

P4 15 MC 102: ACCOUNTING FOR DECISION MAKING

Duration: 3 Hours Max. Marks: 100

SECTION – A

Answer any SEVEN questions. Each carries 5 marks. (7×5=35)

State which of the following would result in inflow/outflow of cash or cash equivalents:

Sl. No.	Items	Effect on Cash or Cash Equivalents
1	Purchase of Stock-in-trade for cash
2	Sale of goods costing Rs. 10,000 for Rs. 12,000 for cash
3	Sale of goods on credit
4	Purchase of a fixed asset by issue of shares
5	Sale of a fixed asset (book value Rs. 15,000) at a loss of Rs. 5,000.
6	Cash received from trade receivable Rs. 9,000 and allowed discount Rs. 1,000.
7	Shares issued for cash.
8	Issue of fully paid bonus shares
9	Redemption of Debentures by converting them into equity shares
10	Writing off bad debts against the provision for doubtful debts

Extracts of Balance Sheets are given below:

Particulars	31/12/14	31/12/15
Balance of P&L A/c	1,00,000	1,50,000
Additional information
1) Depreciation charged on assets		10,000
2) Preliminary expenses written off		5,000
3) Amount transferred to dividend Equalization fund		15,000
4) A plant having a book value of Rs. 60,000 was sold for		65,000
5) Interim dividend paid		10,000

Calculate funds from operation.

Following is the Balance Sheet of Sunshine Ltd., for the year ending December 31, 2014:

Balance Sheet

Liabilities	Rs.	Assets	Rs.
Equity Share Capital	5,00,000	Land and Building	3,50,000
5% Debentures	2,00,000	Plant and Machinery	2,50,000
Bank Loan (Long term)	1,50,000	Cash in hand	25,000
Sundry Creditors	75,000	Cash at Bank	55,000
Bills Payables	50,000	Sundry Debtors	85,000
Outstanding Expenses	5,000	Bills Receivables	1,05,000
		Stocks	1,00,000
		Prepaid Expenses	10,000
	9,80,000		9,80,000

From the information given above, calculate:

(i) (a) Current Ratio (b) Acid test Ratio (c) Absolute Liquid Ratio

(ii) Comment on the short term financial position.

The following information at 50% capacity is given. Prepare a flexible budget and forecast the profit or loss at 90% capacity.

Particulars	Expenses at 50% capacity (Rs)
Fixed Expenses:
Salaries	50,000
Rent and Taxes	40,000
Depreciation	60,000
Administrative Expenses	70,000
Variable Expenses:
Materials	2,00,000
Labour	2,50,000
Others	40,000
Semi-Variable Expenses
Repairs	1,00,000
Indirect Labour	1,50,000
Others	90,000

It is estimated that fixed expenses will remain constant at all capacities. Semi-Variable expenses will not change between 45% and 60% capacity, Semi-Variable expenses but they will rise by 10% between 60% and 75% capacity, a further increase of 5% when capacity crosses 75%

Estimated sales at 90 percent level of capacity is 15,00,000:

A firm purchased Machinery I on 01/01/2014 for Rs.58,200 and spent Rs.1,800 on installation. On 01/07/2014 Machinery II was purchased for Rs.20,000/-. On 01/07/2014 Machinery I was auctioned for Rs.38,600 and on the same date Machinery III was purchased at the cost of Rs.40,000/-. Depreciation was provided annually on 31^st Dec at the rate of 10%. Prepare Machinery Account, calculating depreciation as per written down method.

The following is the record of receipts and issue of a certain material in a factory:

Purchases: 2015

Jan 4^th 500 kg at Rs. 25 per Kg.

Jan 6^th 1,200 Kg at Rs. 24 per Kg.

Jan 15^th 1,800 kg at Rs. 23 per Kg.

Issues: 2015

Jan 5^th 500 Kg

Jan 20^th 800 Kg

Jan 25^th 1,500 Kg.

The stock on Jan 1^st was 100 kg. at Rs. 26 per kg. On 22^nd Jan, stock verification revealed a shortage of 60 Kg. Show the Stores Ledger assuming that the shortage is Normal by adopting the FIFO Method.

Selling price per unit of an article = Rs.150

Variable cost per unit = Rs.90

Fixed Cost = Rs.6,00,000

Contribution = Rs.60

(a) What will be the selling price per unit if the Breakeven point is 8000 units

(b) Compute the sales required to earn a profit of Rs.2,20,000

a) Overheads incurred = Rs.19,200

Actual production = 2,000 units

Std variable overhead rate per unit is Rs.10.

Compute variable overhead variance.

b) Classify the following reasons for causing variance in cost of materials used under Material Cost Variance, Material Price Variance, and Material Usage Variance

(i) Change in Transport charges (ii) Pilferage (iii) Change in Quality

Explain Life Cycle Costing.

10.

Prepare a statement of cost and profit from the following information, in the books of M/s. Precision Tools Co; for the half year ended Mar 31, 2013. Also show the costs at each stage in terms of cost per unit and also the total.

	Rs.
Direct materials consumed	4,20,000
Direct labour charges paid	2,00,000
Direct labour charges outstanding	1,80,000
Prime cost expenses	2,00,000
Factory materials consumed	1,80,000
Factory expense including depreciation	40,000
Factory rent	1,00,000
Office salaries	4,80,000
Salesmen’s salaries	2,40,000

Units produced during the period 10,000 – all the units were sold @ Rs.300/- each.

SECTION – B

II.

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

11.

From the following Balance Sheet, comment on the financial position of the business using comparative balance sheet technique

Name of the Co.: Raj Ltd. Balance Sheet as at 31^st December, 2014 & 2015

Particulars	Note No.	31.12.2015	31.12.2014
I. EQUITY AND LIABILITIES:
(1) Shareholders’ Funds:
(a) Share Capital	1	21,00,000	11,00,000
(b) Reserves and Surplus	2	7,25,000	6,00,000
(2) Share Application Money pending allotment

(3) Non-current Liabilities:
(a) Long-term borrowings (8% Debentures)		10,00,000	2,00,000
(4) Current Liabilities:
(a) Short-term borrowings
(b) Trade Payables (Creditors)		1,00,000	80,000
( c) Other current liabilities (O/S Exps)		25,000	20,000
( d) Short-term provisions
TOTAL		39,50,000	20,00,000
II. ASSETS:
(1) Non-current assets:
(a) Fixed Assets:
(i) Tangible Assets	3	25,00,000	10,00,000
(ii) Intangible Assets
(b) Non-current Investments		2,00,000	3,00,000
(2) Current Assets:
(a) Current Investments
(b) Inventories		6,00,000	4,00,000
(c) Trade Receivables (Debtors)		3,50,000	2,00,000
(d) Cash and Cash Equivalents (Cash)		3,00,000	1,00,000
(e) Short-term Loans and Advances
(f) Other Current Assets
TOTAL		39,50,000	20,00,000

Note: 1:
Share Capital:	31.12.2015	31.12.2014
Equity Share Capital	12,00,000	6,00,000
Preference Share Capital	9,00,000	5,00,000
	21,00,000	11,00,000

Note: 2:
Reserves and Surplus:
Profit and Loss A/c	2,25,000	2,00,000
General Reserve	5,00,000	4,00,000
	7,25,000	6,00,000

Note: 3:
Tangible Assets
Fixed Assets	40,00,000	18,00,000
Accumulated Depreciation	15,00,000	8,00,000
	25,00,000	10,00,000

12.

From the following Balance Sheet prepare schedule of changes in working capital and fund flow statement.

Name of the Co.: R Ltd.

Balance Sheet as at 31^st December, 2014 and 2015

Particulars	Note No.	31.12.2014	31.12.2015
I. EQUITY AND LIABILITIES:
(1) Shareholders’ Funds:
(a) Share Capital		60,000	65,000
(b) Reserves and Surplus (P & L A/c)		34,000	26,000
(2) Share Application Money pending allotment
(3) Non-current Liabilities:
(a) Long-term borrowings
(4) Current Liabilities:
(a) Short-term borrowings
(b) Trade Payables (Creditors)
( c) Other current liabilities		12,000	3,000
( d) Short-term provisions
TOTAL		1,06,000	94,000
II. ASSETS:
(1) Non-current assets:
(a) Fixed Assets:
(i) Tangible Assets (Plant and Machinery)		60,000	50,000
(ii) Intangible Assets (Goodwill)		30,000	25,000
(b) Non-current Investments
(2) Current Assets:
(a) Current Investments
(b) Inventories
(c) Trade Receivables
(d) Cash and Cash Equivalents
(e) Short-term Loans and Advances
(f) Other Current Assets		16,000	19,000
TOTAL		1,06,000	94,000

Additional Information:

a. Depreciation of Rs. 20,000 on Plant and Machinery was charged to P & L A/c.

b. Dividend of Rs. 12,000 was paid during the year.

13.

“Marginal costing is a valuable technique used by the Management, while taking decisions” explain.

14.

Given:

Receivables Turnover =4 Capital turnover ratio = 2 times

Payable turnover = 6 Fixed assets turnover ratio = 8 times

Inventory turnover = 8 Gross profit ratio= 25%

Gross profit during the year amounted to Rs.80, 000. There are no long term loans or Overdraft. Reserve and surplus amount to Rs. 28,000. Closing inventory of the year is Rs.2,000 above the opening inventory. Bills receivable amount to Rs. 5,000 and Bills payable to Rs.2,000. Prepare a Balance sheet on the basis of the information given above.

15.

Hindustan Agro Ltd., was registered with an authorized capital of 8,00,000 shares of Rs.10 each. 6,00,000 shares were issued to the public out of which 5,00,000 share were taken up. The following balances appeared in the books of the company as on 31^st March 2015:

Share Capital 5,00,000 shares of Rs.10 each, Rs.5 called up	25,00,000
Calls in arrears	10,000
Calls in advance	15,000
Profit and Loss balance (on 1.4.2014)	3,50,000
12% Debentures	5,00,000
Unsecured loan	1,50,000
Cash in hand	12,800
Balance with Bank	20,700
Sundry Debtors:
More than six months old	25,000
Other debtors	3,50,000
Sundry creditors	1,82,200
Provision for taxation	75,000
Net profit for the year (after tax)	7,20,000
Freehold premises	16,00,000
Plant and Machinery	18,50,000
Patents	10,000
Goodwill	2,00,000
Preliminary Expenses	44,800
Prepaid Expenses	5,000
Outstanding expenses	66,000
Investment in shares	53,000
Closing stock	3,64,100
Bills receivable	20,000
Bills payable	7,200

Prepare the Company’s Balance Sheet for the year ended 31^st March 2013 in the prescribed form after taking into account the following matters:

a) Transfer to General Reserve Rs.3,00,000;

b) Provide for a dividend of 10% on share capital.

SECTION – C

III.

Case Study (1×20=20)

16.

(a) “The users of accounting info include both internal and external users”. Explain.

(b) Prepare an accounting equation/Balance Sheet at the end of every transaction:

Kunal started business with cash Rs.2,50,000, Bank loan Rs.1,00,000 and Stock Rs.2,00,000
Paid Rent Rs.10,000, Salaries Rs.20,000
Sold goods costing Rs.50,000 for cash Rs.60,000
Cash Rs.20,000 and goods Rs.10,000 withdrawn for personal use
Loss of goods by fire Rs.10,000