Advanced Accounting – I

St. Joseph’s College of Commerce B.Com. 2013 II Sem Advanced Accounting I Question Paper PDF Download

by
  1. JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)

                               END SEMESTER EXAMINATION – APRIL 2013

B.COM – II SEMESTER

 ADVANCED ACCOUNTING – I

Max. Time: 3 Hrs.                                                                                                            Max. Marks: 100

SECTION – A

  1. Answer ALL questions in One or Two sentences:                           (10 x 2 = 20)

 

  1. Write the different methods of valuation of Shares.
  2. What is the main purpose of having an average clause in an insurance policy?
  3. What do you mean by Short Working?
  4. Write the different methods of valuation of non-purchased Goodwill.
  5. Under what heads the Debit balance of Profit and Loss Account and the balance in Preliminary Expenses appear in the Revised Schedule VI?
  6. Write any two types of Royalty.
  7. Loss of stock by fire is Rs. 20,00,000. Amount of Policy is Rs. 17,10,000.  Total Value of Stock on the date of fire is Rs. 22,80,000.  Find the amount of claim applying Average Clause.
  8. Write any two objectives of Branch Accounting.
  9. Write any two factors affecting the valuation of shares.
  10. Normal Profit is Rs. 2,25,000 and the Adjusted Average Profit is Rs. 3,85,000. If Goodwill is to be valued at 4 years purchase of Super Profits, find the value of Goodwill.

 

SECTION –B

  1. Answer ANY FOUR questions:                                                                             (4 x 5 = 20)

 

  1. On 12th June, 2012 fire occurred in the premises of N.R. Patel, a paper merchant. Most of the stocks were destroyed, cost of stock salvaged being Rs. 11,200.  In addition, some stock was salvaged in a damaged condition and its value in that condition was agreed at Rs. 10,500.  From the books of account, the following particulars were available.
  2. His stock at the close of account on December 31, 2011 was valued at Rs. 83,500.
  3. His purchases from 1.1.2012 to 12.06.2012 amounted to Rs. 1,12,000 and his sales during that period amounted to Rs. 1,54,000.

On the basis of his accounts for the past three years it appears that he earns on an average a Gross profit of 25% on cost.

Patel has insured his stock for Rs. 60,000.  Compute the amount of claim applying average clause.

 

  1. Under what headings and sub-headings will you show the following items in the Balance Sheet of the Company?
Unclaimed Dividend Capital Reserve
Prepaid Insurance Goodwill
Calls in arrears Provision for tax
Bills Payable Proposed Dividend
Discount on Issue of Debentures Securities Premium

 

  1. It was agreed to calculate the value of Goodwill of a company at three years purchase of the weighted average profits of the past four years. The appropriate weights to the used are
2009 2010 2011 2012
1 2 3 4

 

The profits for these years after tax are:

2009 2010 2011 2012
Rs. 20,200 Rs. 24,800 Rs. 20,000 Rs. 30,000

 

On a scrutiny of the accounts the following matters are revealed:-

  1. On 1st September, 2011 a major repair was made in respect of the plant incurring Rs. 6,000 which amount was charged to revenue. The paid sum is agreed to be capitalized for goodwill calculation subject to adjustment of depreciation of 10% p.a. on reducing balance method.
  2. The closing stock for the year 2010 was over-valued by Rs. 2,400.
  • To cover management cost an annual charge of Rs. 4,800 should be made for the purpose of goodwill valuation.
  1. Income tax rate should be taken at 50%.
  2. Accounts are closed on 31st every year.

 

Compute the Value of Goodwill.

 

  1. Hindustan Ltd. invoices goods to its Poona Branch at Cost. The branch sells the goods only for cash.  From the following details, prepare the Branch Account for the year ending 31.12.2012:
Particulars Rs.
Stock on 1.1.2012 12,500
Stock on 31.12.2012 14,500
Goods supplied to branch 45,400
Goods returned by branch 600
Petty cash on 1.1.2012 150
Petty cash on 31.12.2012 320
Cash Remitted to branch for:  
       Rent 1,200
       Salary 4,500
       Petty Cash 1,000
Cash Sales 81,300

 

  1. X Coal Ltd., leased a colliery on 1st, 2009 at a minimum rent of Rs. 15,000 merging into a Royalty of Re. 0.50 per ton with a stipulation to recoup short workings over the first three years of the lease. The output for the first four years of the lease was 16,000; 26,000; 42,000 and 36,000 tons respectively.

Prepare Short Workings A/c and Land Lord’s A/c in the books of X Coal Ltd.

 

  1. The following is the Balance Sheet of Bangalore Trading Co. Ltd.
Liabilities Amount (Rs.) Assets Amount (Rs.)
2,000   6% Preference Shares of Rs. 100 each 2,00,000 Fixed Assets 3,00,000
30,000 Equity Shares of Rs. 10 each 3,00,000 Current Assets 3,00,000
Other outside liabilities 1,00,000    
       
Total 6,00,000 Total 6,00,000

 

The market value of Fixed Assets is 25% more than the book value were as Current Assets is 15% less than the book value.  There is an unrecorded liability of Rs. 10,000.  Assume Preference shareholders have right over the Equity Share holders.

You are required to value each Equity Share under Net Asset Method.

SECTION –C

 

  • Answer ANY THREE questions:                                                                  (3 x 15 = 45)

 

  1. On 1st April, 2012 the stock of Shri Ramesh was destroyed by fire but sufficient records were saved from which following particulars were ascertained:
Particulars Amount (Rs.)
Stock at Cost 1.1.2011 73,500
Stock at Cost 31.12.2011 79,600
Purchases – year ended 31.12.2011 3,98,000
Sales – year ended 31.12.2011 4,87,000
Purchases from 1.1.2012 to 31.3.2012 1,62,000
Sales from 1.1.2012 to 31.3.2012 2,31,200

 

In valuing the stock for the Balance Sheet at 31st December, 2011, Rs. 2,300 had been written off on certain stock which was of poor selling line having the cost of Rs. 6,900.  A portion of these goods were sold in March, 2012 at a loss of Rs. 250 on original cost of Rs. 3,450.  The remainder of this stock was now estimated to be worth its original cost.  Subject to the above exception, Gross Profit had remained at a uniform rate throughout the year.

 

The value of stock salvaged was Rs. 5,800.  The policy was for Rs. 50,000 and was subject to the average clause.  Work out the amount of the claim of loss by fire.

 

  1. From the following particulars furnished by Abhishek Ltd. prepare the Balance Sheet as at 31st March 2012 as required by Schedule VI of the Companies Act.
Particulars Debit Credit
Equity Capital (Face Value Rs. 100)   10,00,000
Calls in arrears 1,000  
Land 2,00,000  
Building 3,50,000  
Plant and Machinery 5,25,000  
Furniture 50,000  
General Reserve   2,10,000
Loan from State Finance Corporation   1,50,000
Stock of Finished Goods 2,00,000  
Stock of Raw Materials 50,000  
Provision for Taxation   68,000
Sundry Debtors 2,00,000  
Advances 42,700  
Proposed Dividend   60,000
Profit and Loss Account   1,00,000
Cash 30,000  
Bank 2,47,000  
Preliminary Expenses 13,300  
Loans (Unsecured)   2,21,000
Sundry Creditors (for goods and expenses)   2,00,000
     
TOTAL 19,09,000 19,09,000

 

  1. Balance Sheet of Golden Ltd. as on 31.12.2012
Liabilities Amount (Rs.) Assets Amount (Rs.)
Share Capital: 2,000 shares of Rs. 100 each 2,00,000 Land & Buildings 1,10,000
General Reserve 40,000 Plant & Machinery 1,30,000
Profit & Loss A/c 32,000 Patents & Trade Marks 20,000
Sundry Creditors 1,28,000 Stock 48,000
Income tax payable 60,000 Debtors 88,000
    Bank 52,000
    Preliminary Expenses 12,000
       
Total 4,60,000 Total 4,60,000

 

The expert valuer valued Land and Building at Rs. 2,40,000; Goodwill at Rs. 1,60,000 and Plant and Machinery at Rs. 1,20,000.  Out of the total Debtors, it is found that debtors of Rs. 8,000 are bad.  The profits of the company after tax have been as follows:-

 

2010 2011 2012
Rs. 80,000 Rs. 90,000 Rs. 86,000

 

The Company follows the practice of transferring 25% of the profits to General Reserve.  Similar types of companies, each, earn a profit of 10% of the value of their shares.  Income tax rate is 50%.  Ascertain the value of shares of the company under:

 

  1. Intrinsic Value Method b) Yield Method                     c) Fair Value Method

 

 

 

 

 

 

  1. The summarized Balance Sheet of Raj Ltd., as on 31st December, 2012 is as follows:
Liabilities Amount (Rs.) Assets Amount (Rs.)
1,500  6% Preference Shares of Rs. 100 each 1,50,000 Goodwill 50,000
6,500  Equity Shares of Rs. 100 each 6,50,000 Freehold Property 3,75,000
Profit and Loss A/c 4,50,000 Plant & Machinery 3,50,000
5% Debentures 3,00,000 Stock 3,70,000
Sundry Creditors 2,39,250 Debtors (net) 3,99,250
    Bank 2,45,000
       
Total 17,89,250 Total 17,89,250

 

Profit after tax for the last 3 years was as follows:

 

2010 2011 2012
Rs. 2,20,500 Rs. 3,22,500 Rs. 2,40,000

Mr. Anesh is interested in buying all the Equity Shares and requests you to let him know the proper price.

You are given the following information:

  1. Normal Profit to be calculated at 10% of the Closing Capital Employed.
  2. Goodwill may be calculated on the basis of an annuity of super profits of the 3 years. The present value of an annuity of Re. 1 for 3 years at 10% p.a. interest is Rs. 2.478.
  • The value of freehold property is to be ascertained on the basis of 10% return. The current rental value is Rs. 60,800.
  1. Rate of Income tax is 50%.
  2. 10% of profits before tax for 2011 arose from a transaction of a non-recurring nature.
  3. A provision of Rs. 15,750 on sundry debtors was made in 2012, which is no longer required.
  • A claim of Rs. 5,000 against the company is to be provided and adjusted against profit for 2012.
  • Closing Stock of 2011 was over-valued by Rs. 10,000.
  1. A Major repair of plant was made on 1.7.2010 incurring Rs. 25,000. The said sum is agreed to be capitalized, subject to adjustment of depreciation at 10% p.a. on straight line method.

Ascertain the value of Goodwill of the Company.

 

  1. X Coal Ltd. has taken on lease coalfields from Y, on the following terms:
  2. Lease is for 99 years.
  3. Lease rent is to be 50 paise for every tonne of coal raised.
  • Minimum royalty per annum is to be Rs. 30,000 and the lessee has a right to recoup any short working within a period of three years for which the excess payment was made.
  1. In case the working of the mines was affected by any strike or riot and there were no raisings, then the minimum rent payable would abate proportionately.
  2. The following were the raisings for the different years:
Year Tonnes Other Information
1997 20,000  
1998 35,000  
1999 30,000 There was a strike for 3 months during which no coal was mined.
2000 70,000  
2001 80,000  
2002 1,00,000  

 

You are required to show the Royalties, Short-workings and Y’s A/c in the books of X Coal Ltd.  Analytical Table should form part of your answer.

 

SECTION – D

  1. COMPULSORY QUESTION:                                                                           (1 x 15 = 15)

 

  1. On account of a fire on 15th June 2011, in the business house of a Company, the working remained disturbed upto 15th December,2011 as a result of which it was not possible to effect any sales. The company had taken out an insurance policy with an average clause against consequential losses for Rs. 35,000, and a period of 7 months has been agreed upon as Indemnity Period.  An increase of 25% was marked in the current year’s sales as compared to the last year.  The company incurred an additional expenditure of Rs. 3,000 to make sales possible and made a saving of Rs. 500 in the Insured Standing charges.  The following further details are available:-
Particulars Amount in Rs.
Actual Sales from 15th June 2011 to 15th Dec. 2011 17,500
Sales from 15th June 2010 to 15th Dec. 2010 60,000
Net Profit for the Last financial year 20,000
Insured Standing Charges for the Last Financial Year 17,500
Total Standing Charges for the Last Financial Year 30,000
Turnover for the Last Financial Year 1,50,000
Turnover for one year : 16th June 2010 to 15th June 2011 1,40,000

 

Ascertain the Claim for Loss of Profits.

 

 

St. Joseph’s College of Commerce B.Com. 2013 I Sem Advanced Accounting I Question Paper PDF Download

by

1
ST. JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)
END SEMESTER EXAMINATION – OCTOBER 2013
B.COM – III SEMESTER
ADVANCED ACCOUNTING – I
Duration: 3 hours Max. Marks: 100
SECTION – A
I) Answer any TEN of the following: ( 10 x 2 = 20)
1. Why do companies buy back their shares?
2. Why preference shares can not be redeemed out of fresh issue of Debentures?
3. What is the mechanism of using revenue profit to CRR account?
4. What are ex interest and cum interest?
5. Identify in the following cases whether they are merger/acquisition/internal
reconstruction/external reconstruction/neither. Why?
a) Vodafone and Hutch
b) Tata acquired Land Rover and Jaguar
6. How do you calculate Liquidator’s remuneration if amount is not sufficient to
pay to equity shareholders?
7. Who is official liquidator?
8. Mention any two methods of redemption of debentures ?
9. What is the journal entry to redeem debentures if issued at discount but
redeemed at premium?
10. Can we transfer investment allowance to CRR account at the time of redemption
of debentures?
11. Write short notes on Section 78 and 79( in four lines).
12. Who are contributories?
SECTION-B
II) Answer ANY FOUR questions from the following: ( 4 x 5=20)
13. Journalise the following issues of debentures in the books of the respective
company. Also show the relevant extracts of the Balance Sheet.
a) August 15th Limited issued Limited issued 100, 14% debentures of Rs. 10 each at par
and redeemable at the end of 5 years at premium of 10%
b) No more limited issued 5,000, 13% Debentures of Rs. 10 each at a premium of 10%
and are redeemable at the end of four years at a premium of 20%
14. How do you deal the following in the new balance sheet after acquiring S Ltd. ?
a) S Ltd. has taken loan of Rs. 20,000 from H Ltd
b) H Ltd. draws a bill of Rs. 50,000 on S Ltd.
c) S Ltd. issued debentures of Rs. 1,00,000 which are held by H Ltd.
15. Following is the balance sheet of A ltd as on 31/3/2008:
2
Liabilities Rs Assets Rs
10,000 equity shares of Rs 10 each 1,00,000 Fixed assets 2,00,000
Reserves & surplus 50,000 Current assets 50,000
12% Debentures 75,000
Creditors 25,000
2,50,000 2,50,000
B Ltd absorbs the business of A Ltd and agrees to discharge the purchase consideration
as under:
a) Cash payment of Rs 2 per share
b) Issue of sufficient number of equity shares of Rs 10 each at a premium of 100%
for the balance
Calculate the purchase consideration and state the number of equity shares issued
assuming that fixed assets are valued at Rs 2,75,000 and current assets at Rs 45,000.
16. Explain Section 77A of the Companies Act 1956 and give the corresponding journal
entries.
17. Explain preferential status and general order of distribution as per the latest
provision of the Companies Act at the time of liquidation.
SECTION-C
III) Answer ANY THREE questions of the following: (3 x 15 = 45)
18. BECOM Ltd. Issues 12% 1,00,000 Preference shares of Rs. 10 each at a premium of
Rs.2 per share and the balance in 8% debentures of Rs. 100 each to BEBEEM
Entertainment & Co as consideration for purchase of the following assets and at the
following values:
Land Rs. 5,00,000
Buildings Rs. 3,00,000
Plant Rs. 2,00,000
Machinery Rs. 8,00,000
a) Pass necessary journal entries in the books of BECOM Ltd under each of the
following circumstances. If debentures are issued :
i) At Par
ii) At 10% discount
3
iii) At 12.5% premium
b) Pass journal entry in the books of BEBEEM & Co if debentures are issued :
iv) At Par
v) At 10% discount
vi) At 12.5% premium
19. The following is the Balance Sheet of Angami Ltd. as on 31st March, 2013:
Liabilities Rs. Assets Rs.
12,000, 10% Preference shares of
Rs.100 each
24,000, Equity shares of Rs.100
each
10% Debentures
Bank overdraft
Sundry Creditors
12,00,000
24,00,000
6,00,000
6,00,000
3,00,000
Goodwill
Land & building
Plant & machinery
Stock
Debtors
Cash
Profit & Loss Account
Preliminary expenses
90,000
12,00,000
18,00,000
2,60,000
2,80,000
30,000
14,00,000
40,000
51,00,000 51,00,000
On the above date, the company adopted the following scheme of reconstruction:
(i) The equity shares are to be reduced to shares of Rs.40 each fully paid and the
preference shares to be reduced to fully paid shares of Rs.75 each.
(ii) The debenture holders took over stock and debtors in full satisfaction of their
claims.
(iii) The Land and Building to be appreciated by 30% and Plant and machinery to be
depreciated by 30%.
(iv) The fictitious and intangible assets are to be eliminated.
(v) Expenses of reconstruction amounted to Rs.5,000.
Give journal entries incorporating the above scheme of reconstruction and prepare the
reconstructed Balance Sheet.
20. A part of the Balance Sheet of Palani Valu Murugan Ltd. As on 31st March 2013 was
as follows:
Liabilities Rupees Assets Rupees
10,000 Equity Shares of Rs. 10
each Fully paid up
11% Redeemable Preference
shares of 100 each fully called
up
1,00,000
Less: Calls in arrears
1,00,000
96,000
Fixed Assets
Debtors
Stock
Investments(Face value Rs.
20,000)
Bank
2,62,000
90,000
30,000
30,000
4,000
4
@Rs.20 per share 6,000
10% Redeemable preference
shares of Rs. 100 each fully
paid up
General Reserve
Profit and Loss Account
Security premium
Creditors
1,00,000
40,000
20,000
5,000
57,000
11% Redeemable preference shares were due for payment on 1st June 2013 at a premium
of 10%. All Investments were sold at 135% of their face value. The company issued
adequate number of equity shares at par, to the extent available profits were insufficient
to back up redemption. The company has a facility of temporary bank overdraft to the
extent of Rs. 50,000.
Required: Give the necessary journal entries and prepare the Balance sheet of the
company after redemption.
21. The financial position of two companies Hari Ltd. and Vayu Ltd. as on 31st March,
2002 was as under:
Assets Hari Ltd. (Rs.) Vayu Ltd.(Rs.)
Goodwill 50,000 25,000
Buildings 3,00,000 1,00,000
Machinery 5,00,000 1,50,000
Stock 2,50,000 1,75,000
Debtors 2,00,000 1,00,000
Cash at Bank 50,000 20,000
Preliminary Expenses 30,000 10,000
13,80,000 5,80,000
Liabilities Hari Ltd.
(Rs.)
Vayu Ltd.
(Rs.)
Share Capital:
Equity Shares of Rs. 10 each 10,00,000 3,00,000
9% Preference Shares of Rs. 100 each 1,00,000 ––
10% Preference Shares of Rs. 100 each -–– 1,00,000
General Reserve 1,00,000 80,000
Retirement Gratuity fund 50,000 20,000
5
Sundry Creditors 1,30,000 80,000
13,80,000 5,80,000
Hari Ltd. absorbs Vayu Ltd. on the following terms:
(a) 10% Preference Shareholders are to be paid at 10% premium by issue of 9%
Preference shares of Hari Ltd.
(b) Goodwill of Vayu Ltd. is valued at Rs. 50,000, Buildings are valued at Rs. 1,50,000
and the Machinery at Rs. 1,60,000
(c) Stock to be taken over at 10% less value and Reserve on Bad and Doubtful Debts to
be created @ 7.5%
(d) Equity Shareholders of Vayu Ltd. will be issued Equity Shares @ 5% premium
Required:
a) Prepare necessary Ledger Accounts to close the books of Vayu Ltd. and show the
acquisition entries in the books of Hari Ltd.
b) Draft the Balance Sheet after absorption as at 31st March, 2002.
22. Balance sheet of X Ltd and Y Ltd given below
Liabilities X. Ltd Y. Ltd Assets X. Ltd Y. Ltd
1,00,000 Equity
shares of 10 each
50,000 shares of
Rs. 10 each
10,000 10%
debentures of Rs.
100 each
10,00,000
–
10,00,000
–
5,00,000
10,00,000
Fixed Assets
Investment in Mary
Ltd(30,000 shares)
Current assets
15,00,000
4,00,000
1,00,000
15,00,000
–
20,00,000 15,00,000 20,00,000 15,00,000
Fixed assets of X. Ltd can be sold for Rs. 20,00,000 and Y. Ltd for Rs. 12,00,000.
Calculate:
a) Intrinsic value of X. Ltd
b) Number of shares will be issued by X. Ltd to Y. Ltd based on intrinsic values if X. Ltd
acquires Y Ltd.
c) Number of shares to be allotted to X. Ltd if Y. Ltd. Acquires X. Ltd based on intrinsic
values
6
SECTION-D
IV) Compulsory question. (1×15=15)
23. Following is the Balance Sheet of M Ltd. as at 31st March, 2008:
Liabilities Rs. Assets Rs.
15,000, 10% Preference shares
of
Rs.100 each
35,000 Equity shares of Rs.100
each
Securities Premium account
7% Debentures of Rs.100 each
Creditors
Loan from Director
15,00,000
35,00,000
1,00,000
5,00,000
12,50,000
1,50,000
Goodwill
Land & Buildings
Plant & Machinery
Stock
Debtors
Cash at bank
Preliminary
expenses
Profit & Loss A/c
3,50,000
15,00,000
10,00,000
6,00,000
15,00,000
1,00,000
4,00,000
15,50,000
70,00,000 70,00,000
No dividend on Preference shares has been paid for the last 5 years.
The following scheme of reorganization was duly approved by the court:
(i) Each Equity share to be reduced to Rs.25.
(ii) Each existing Preference share to be reduced to Rs.75 and then exchanged for 1 new
13% Preference share of Rs.50 each and 1 Equity share of Rs.25 each.
(iii) Preference share holders have forgone their right for dividend for four years. One
year’s dividend at the old rate is however, payable to them in fully paid equity Shares
of Rs.25.
(iv) The Debenture holders be given the option to either accept 90% of their claims in cash
or to convert their claims in full into new 13% Preference shares of Rs.50 each issued at
par. One half (in value) of the debenture holders accepted Preference shares for their
claims. The rest were paid cash.
(vi) Goodwill does not have any value in the present. Decrease the value of Plant and
Machinery, Stock and Debtors by Rs.4,00,000, Rs.1,00,000 and Rs.1,50,000 respectively.
Increase the value of Land and Buildings to Rs.18,00,000.
Pass necessary Journal Entries to record the above transactions and prepare capital
reduction account and new Balance Sheet after reconstruction.
************************

St. Joseph’s College of Commerce B.Com. 2014 II Sem Advanced Accounting I Question Paper PDF Download

by

ST. JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)
END SEMESTER EXAMINATION –APRIL 2014
B.COM – II SEMESTER
ADVANCED ACCOUNTING – I
Time: 3 hrs Marks: 100
SECTION – A
I) Answer ALL the questions. Each carries 2 marks. (2 x 10 =20)
1. State 5 methods of valuation of goodwill.
2. The intrinsic value of a share is Rs.260/- and its yield value is Rs.290/-.
Calculate the fair value of the share.
3. Explain Recoupment of short working.
4. What is meant by ‘poor selling line’ of goods? Compare the Gross Profit ratio of
these goods with that of normal stock.
5. The super profits of a company is Rs.25,000/-. The present value of an annuity
of Re.1, for 3 years at 10% per annum is 2.478. Calculate the value of goodwill
using Annuity method.
6. Ascertain Opening Stock when:-
Purchases 60,000
Wages 20,000
Sales 1,00,000
Closing stock 15,000
Percentage of gross profit on sales is 25%
7. As per the Revised Schedule VI of the Co’s Act. Where do the following items
appear in the Balance Sheet?
(a) Preliminary Expenses (b) Bills discounted but not yet matured
(b) Calls in Advance (d) Workmen’s Accident Compensation Fund
8. State the formula for valuation of Right Shares.
9. State two differences between Dependent and Independent Branches.
10. The Head office charges the Branch at cost plus 25%. Goods sent to Branch is
Rs.40,000/- Goods returned to Head office is Rs.600/-. What is the net value of
Goods sent to Branch?
SECTION – B
II) Answer ANY FOUR questions. Each carries 5 marks. (4 x 5 =20)
11. Under what heads will you show the following items in the Balance Sheet of the
Company?
a. Securities Premium
b. Interest accrued but due on secured loan
c. Interest accrued but not due on loan
d. Uncalled liability on partly paid shares
e. Capital Reserve
f. Debit balance in the statement of profit and loss
2
g. Employees earned leave payable on retirement
h. Computer soft wares
i. Goods in transit
j. Provision for Provident Fund Scheme
12. The following particulars are available in respect of the business carried on by
Wisehead:
Rs.
1 Capital invested 50,000
2 Trading results:
2010 Profits Rs.12,200; 2011 Profit Rs.15,000;
2012 Loss Rs.2,000; 2013 Profits Rs.21,000
3 Market rate of interest on investments 8%
4 Rate of risk return on capital invested in
business
2%
5 Remuneration from alternative employment of
the proprietor (if not engaged in business)
3,600 per
annum
You are required to compute the value of goodwill on the basis of 3 years’ purchase of
super profits of the business calculated on the average profits of the last four years.
13. Prosperous Company is planning to raise funds by making rights issue of equity
shares to finance its expansion. The existing ordinary share capital of the
company is Rs. 2 Crore. The par value of its shares is Rs. 20 and the Market price
is Rs. 80. The alternatives under consideration before the management for
making rights issue are given below:
a) 4 new shares for 4 old shares @ par.
b) 3 new shares for 5 old shares @ Rs. 30.
c) 2 new shares for 5 old shares @ Rs. 40
d) 1 new share for 5 old shares @ Rs. 50.
Calculate the theoretical market price after the issue.
14. From the following particulars, prepare Branch Account showing the Profit or
Loss for the branch:
Opening Stock at the branch 60,000
Goods sent to branch 1,80,000
Sales (Cash) 2,40,000
Expenses:
Salaries 20,000
Other Expenses 8,000
Closing stock could not be ascertained, but it is known that the Branch generally
sells at cost plus 20%. The branch manager is entitled to a commission of 5% on
the profit before charging such commission.
15. Hubli Coal worked under a lease which provided for the payment of royalties at
Rs.5/- per ton with a minimum rent of Rs.25,500 per annum. Each year’s excess

St. Joseph’s College of Commerce B.Com. 2014 II Sem Advanced Accounting – I Question Paper PDF Download

by

St. Joseph’s College of Commerce (Autonomous)

End Semester Examination –APRIL 2014

B.COM – II SEMESTER

ADVANCED ACCOUNTING – I

Time: 3 hrs                                                                                                     Marks: 100

Section – A

 

  1. I) Answer ALL the questions. Each carries 2 marks.               (2 x 10 =20)

 

  1. State 5 methods of valuation of goodwill.
  2. The intrinsic value of a share is Rs.260/- and its yield value is Rs.290/-.  Calculate the fair value of the share.
  3. Explain Recoupment of short working.
  4. What is meant by ‘poor selling line’ of goods?  Compare the Gross Profit ratio of these goods with that of normal stock.
  5. The super profits of a company is Rs.25,000/-.  The present value of an annuity of Re.1, for 3 years at 10% per annum is 2.478.  Calculate the value of goodwill using Annuity method.
  6. Ascertain Opening Stock when:-
Purchases 60,000
Wages 20,000
Sales 1,00,000
Closing stock 15,000

Percentage of gross profit on sales is 25%

 

  1. As per the Revised Schedule VI of the Co’s Act.  Where do the following items appear in the Balance Sheet?
  • Preliminary Expenses (b) Bills discounted but not yet matured
  • Calls in Advance (d) Workmen’s Accident Compensation Fund
  1. State the formula for valuation of Right Shares.
  2. State two differences between Dependent and Independent Branches.
  3. The Head office charges the Branch at cost plus 25%.  Goods sent to Branch is Rs.40,000/- Goods returned to Head office is Rs.600/-.  What is the net value of Goods sent to Branch?

Section – B

 

  1. II) Answer any four Each carries 5 marks.    (4 x 5 =20)

 

  1. Under what heads will you show the following items in the Balance Sheet of the Company?
  2. Securities Premium
  3. Interest accrued but due on secured loan
  4. Interest accrued but not due on loan
  5. Uncalled liability on partly paid shares
  6. Capital Reserve
  7. Debit balance in the statement of profit and loss
  8. Employees earned leave payable on retirement
  9. Computer soft wares
  10. Goods in transit
  11. Provision for Provident Fund Scheme

 

  1. The following particulars are available in respect of the business carried on by Wisehead:

 

          Rs.
1 Capital invested 50,000
2 Trading results:  
  2010 Profits Rs.12,200; 2011 Profit Rs.15,000;  
  2012 Loss Rs.2,000; 2013 Profits Rs.21,000  
3 Market rate of interest on investments 8%
4 Rate of risk return on capital invested in business 2%
5 Remuneration from alternative employment of the proprietor (if not engaged in business) 3,600 per annum

You are required to compute the value of goodwill on the basis of 3 years’ purchase of super profits of the business calculated on the average profits of the last four years.

 

  1. Prosperous Company is planning to raise funds by making rights issue of equity shares to finance its expansion.  The existing ordinary share capital of the company is Rs. 2 Crore.  The par value of its shares is Rs. 20 and the Market price is Rs. 80.  The alternatives under consideration before the management for making rights issue are given below:
  1. 4 new shares for 4 old shares @ par.
  2. 3 new shares for 5 old shares @ Rs. 30.
  3. 2 new shares for 5 old shares @ Rs. 40
  4. 1 new share for 5 old shares @ Rs. 50.

 

Calculate the theoretical market price after the issue.

 

  1. From the following particulars, prepare Branch Account showing the Profit or Loss for the branch:

 

Opening Stock at the branch 60,000
Goods sent to branch 1,80,000
Sales (Cash) 2,40,000
Expenses:  
Salaries 20,000
Other Expenses 8,000

Closing stock could not be ascertained, but it is known that the Branch generally sells at cost plus 20%.  The branch manager is entitled to a commission of 5% on the profit before charging such commission.

 

  1. Hubli Coal worked under a lease which provided for the payment of royalties at Rs.5/- per ton with a minimum rent of Rs.25,500 per annum.  Each year’s excess of minimum rent over the actual royalties was receivable during the subsequent three years.  The lease, stipulated that if in any year the normal rent was not attained due to strike or accident, the minimum rent was to be regarded as having been reduced proportionately having regarded to the length of the stoppage.  The output was as follows:

 

Year Output (in tons)
2000 600
2001 4,200
2002 4,500
2003 6,900
2004 4,500 (there was a strike)
2005 7,500

During the year 2004, there was a stoppage of work due to strike lasting three months.  Prepare Analytical Table only.

 

  1. A fire occurred on the premises of a merchant on 18th September, 2013 and a considerable part of the stock was destroyed.   The value of the stock saved was Rs.8,200/-.

The books disclosed that on 1st April 2013 the stock was valued at Rs.66,850/- the purchases to the date of fire amounted to Rs.1,85,000/- and the sales to Rs.2,82,500/-.  Goods costing Rs.500/- were taken for personal use and goods sold for Rs.2,500/- were returned to the merchant.  On investigation it is found that during the past five years the average gross profit on the cost was 25%.

You are required to prepare statement showing the amount the merchant should claim from the insurance company in respect of stock destroyed by fire.

 

Section – C

 

III) Answer any three questions.  Each carries 15 marks.                   (3 x 15 = 45)

 

  1. Suman Bros, had a branch at Kanpur, goods are invoiced to the branch at cost plus 25%.  Branch is instructed to deposit cash every day in the head office account in the bank.  All expenses are paid by the Branch Manager.  From the following particulars, prepare Branch account in the books of the head office.
  Rs.   Rs.
Stock on 1.1.2012 2,500 Furniture purchased By Branch Manager 1,200
Stock on 31.12.2012 3,000 Goods invoice from Head Office 18,200
Sundry debtors on 1.1.2012 1,400 Expenses paid by HO 1,640
Sundry Debtors on 31.12.2012 1,800 Expenses paid by Branch 120
Cash Sales for the year 10,800 Cash sent by HO to purchase locker for Branch 1,300
Credit Sales for the year 7,000    
Cash remitted to HO 15,000    

 

  1. From the following particulars, calculate the fair value of an equity share assuming that out of the total assets, those amounting to Rs.41,00,000 are fictitious:
  • Share capital:

5,50,000 10% Preference shares of Rs.100 each, fully paid up

55,00,000 Equity shares of Rs.10 each, fully paid up

  • Liability to outsiders: Rs.75,00,000
  • Reserves and surplus: Rs.45,00,000
  • The average normal profit after taxation earned every year by the company during the last five year’s Rs.85,05,000
  • The normal profit earned on the market value of fully paid equity shares of similar companies is 12%

 

  1. On 1st July 2013, the stock of Mahesh was destroyed by fire but sufficient records were saved from which the following particulars were ascertained:
          Rs.
Stock at cost – 1st April 2012 73,500
Stock at cost – 31st March 2013 79,600
Purchases – Year ended 31st March 2013 3,98,000
Sales – Year ended 31st March 2013 4,87,000
Purchases – 1st April 2013 to 30th June 2013 1,62,000
Sales – 1st April 2013 to 30th June 2013 2,31,200

 

In valuing the stock for the Balance Sheet on 31st March 2013, Rs.2,300 has been written off against certain stock which was a poor selling line, the cost of which was Rs.6,900/- .   A portion of these goods was sold in June 2013 at a loss of Rs.250 on original cost of Rs. 3450 The remainder of the stock was now estimated to be worth the original cost.  Subject to the above exception, gross profit had remained at a uniform rate throughout the year.

The value of stock salvaged was Rs.5,800.  The policy was of Rs.50,000 and was subject to average clause.   Show amount of claim for the loss by fire.

 

  1. From the following details, calculate Consequential Loss Claim
  1. Date of Fire: 1st September
  2. Indemnity Period: 6 months
  3. Period of Disruption: 1st September to 1st February
  4. Sum Insured: Rs.1,08,900
  5. Sales were Rs.6,00,000 for the preceding financial year ended on 31st March
  6. Net Profit for preceding Financial Year Rs.36,000 plus Insured Standing Charges Rs.72,000
  7. Rate of Gross Profit 18%
  8. Uninsured Standing Charges Rs.6,000
  9. Turnover during the Disruption Period Rs.67,500
  10. Annual Turnover for 12 months immediately preceding the date of fire Rs.6,60,000
  11. Standard Turnover, i.e., for corresponding months (1st Sept to 1st Feb) in the year preceding the date of fire Rs.2,25,000
  12. Increase in Cost of Working Capital Rs.12,000 with saving of Insured Standing Charges Rs.4,500/- during Disruption Period.
  13. Reduced Turnover avoided through increase in Working Capital Rs.30,000
  14. Special clause stipulated – (a) Increase in rate of GP 2%, and (b) Increase in Turnover (Standard and Annual) 10%

 

  1. The following balances are found in the books of Five Star Fashions Ltd., after its Profit & Loss Statement has been prepared for the year ended 31st March 2012.
  Rs.   Rs.
Public Deposits 1,50,000 Sundry Debtors 5,20,000
Interest accrued but not due 2,500 Security Deposit 80,000
Bank Overdraft 2,36,600 Interest Accrued on Investments 6,000
Sundry Creditors 1,75,000 Plant and Machinery 15,40,000
General Reserve 2,00,000 Vehicles 3,10,000
1,60,000 Equity Shares of Rs.10 each 16,00,000 10% Government Bonds 60,000
5,000, 10% Preference Shares of Rs.100 each 5,00,000 Loan to Staff 25,000
Securities Premium 2,00,000 Stock in Trade 4,10,700
10% Secured Loan 1,80,000 Prepaid Insurance 1,000
Interest Assured and due on Secured Loan 4,800 Share issue Expenses 5,000
Net Profit for the year ended 31st March, 2012 3,20,000 B/R 22,000
Expenses Owing 12,200 Cash and Bank Balance 15,400
Employees’ Benefit Fund 20,000 Land and Building 6,44,000
Sinking Fund 38,000    
  36,39,100   36,39,100

Note: Bills Receivable discounted but not matured Rs.15,000/-

It was resolved that:

  • The General Reserve be increased to Rs.2,50,000
  • A dividend of 8% on Equity Share Capital and 10% on Preference Share Capital be declared.

Prepare the Company’s Balance Sheet as on 31st March 2012.

 

  1. The following is the balance sheet of A. limited 31-12-2013.
Liabilities Amount Assets Amount
Share capital 10,000 shares @ Rs.10/-each 1,00,000 Goodwill 20,000
General reserve 15,000 Plant & Machinery 40,000
6% Debentures(Rs.100/) 25,000 Land & building 45,000
P & L a/c (as on 1.1.2013) 5,000 Investments 20,000
Profits for the year before tax 40,000 Stock 25,000
Creditors 10,000 Debtors 20,000
Provision for tax 5,000 Cash at bank 25,000
    Discount on issue of debentures 5,000
  2,00,000   2,00,000

 

 

Assets revalued:-

Plant & Machinery= Rs. 50,000, Land and building= Rs. 40,000, investment= Rs. 25,000.

Profits include Rs.1,000/- being income on investments. Calculate the value of goodwill on the basis of three years purchase of super profits assuming that debentures are treated as long term capital. N.R.R is 12%, Tax rate is 50%, and depreciation on building is @ 10% and depreciation on plant and machinery @ 5%.

 

Section – D

  1. IV) Compulsory question.     (15 marks)

 

23.

 

  • In the terms of the lease, minimum rent was fixed at Rs.24,000/-. Royalty is to be calculated at 50 paise per ton.  Due to strike, minimum rent is to be reduced by 25 percent for that year.  In a particular year, there was a strike for 3 months and production was 44,000 tones.  Calculate the amount paid to the landlord.

   (3 marks)

 

  • Write the format of Profit and Loss Account as per revised Schedule VI of the Co’s Act.                                                                            (6 marks)

 

  • A Company had 1000 equity shares of Rs.100 each, Rs.50 called up, and 1000 equity shares of Rs.100 each, Rs.25 called up and 1000 equity shares of Rs.100 fully called up. Preliminary expenses existed to the extent of Rs.50,000/-.  Calculate the value of its Net Assets.                                                       (3 marks)

 

  • A company has issued 80,000 shares of Rs.10 each. A fair investment return may be taken at 10%, this being considered reasonable in the industry in which the company is engaged in.  The profit available to share holders was Rs.82,800/-.  Calculate the capitalized value of its profits.                                           (3 marks)

 

 

 

© Copyright Entrance India - Engineering and Medical Entrance Exams in India | Website Maintained by Firewall Firm - IT Monteur