LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

B.Com. DEGREE EXAMINATION – CORPORATE SECRETARYSHIP

IR 03

SECOND SEMESTER – April 2009

BC 2501/ BC 2500 – FINANCIAL ACCOUNTING

 

 

 

Date & Time: 23/04/2009 / 1:00 – 4:00        Dept. No.                                                             Max. : 100 Marks

 

 

PART – A

Answer ALL questions:                                                                               (10 x 2 = 20)

1. What are the differences between straight line method and Diminishing balance method of depreciation?
2. If Mr. A had taken a lease of quarry from Mr. B for five years with a commitment of minimum rent Rs. 40,000 per annum, his out put for three years were Rs.25,000, Rs. 42,000 and 75,000, what would be Journal entries he had to pass in his books for the second year.
3. The books of Mr. X for the year ending 31 March 2008 show Opening stock Rs. 60,000, Closing stock Rs. 40,000. Purchases Rs.4,00,000; Wages Rs.10,000. Rate of gross profit on sales 20%. Calculate sales for the year.
4. What are the limitations of Single entry system of accounting?
5. On what basis you will apportion the following expenses in Departmental accounting? Building rent, electric power, welfare expenses and advertising expenses.
6. Give journal entries in the books of Head office for the following transactions:
7. Expenses paid by the Head office for its X branch Rs. 40,000, for Y branch Rs. 60,000 not yet adjusted in the accounts.
8. Goods sent by branch X to Y branch Rs. 30,000 are yet to be recorded.
9. X tells you that his capital on 31 March 2007 is Rs. 1,87,000 and his capital on 1 April, 2006 was Rs. 1,92,000. He further informs you that during the year he gave a loan of Rs.35,000 to his brother on private account and withdrew Rs.3000 per month for personal expenses. He also had a flat for his personal use the rent of which at the rate of Rs.1,000 per month and electricity charges at an average of Rs.100 per month were paid from business account. He once sold his 7.5% Government Bond Rs.2,00,000 at 2% premium and brought that money into the business. Besides that there is no other information. You are required to prepare a statement of profit for the year 2006-07.
10. What is the significance of an Average clause in an insurance policy?
11. How is an agreement of Hire Purchase different from an instalment sale?
12. What do you understand by the Terms: Dead Rent and Short workings?

 

PART – B

Answer any FIVE questions:                                                                       (5 x 8 = 40)

11. A company purchased Machinery for Rs. 60,000 on 1 October 2004. It was decided to depreciate it at 10% per annum on diminishing balance method. On 1 April 2006 it was decided to depreciate at 10% per annum on straight line method and to adjust the difference in depreciation arising from the change of method to Profit and Loss a/c for the year 2006-07. Show Machinery account for three years ending 31 March 2005, 2006 and 2007.
12. Arul purchased machinery under the hire purchase system from Mr. Balu. The cash price of the machinery was Rs.15,000. The payment for the purchase is to be made as follows: on signing the agreement Rs. 3,000; end of the first year Rs.5,000 and end of the second year Rs. 5,000 and end of third year Rs. 5,000. Calculate the amount of interest included in each instalment.
13. From the following particulars prepare Branch Account showing the profit or loss of the branch:

Opening stock at the Branch Rs. 30,000

Goods sent to Branch             Rs. 90,000

Sales (Cash)                            Rs. 1,20,000

Expenses: Salaries                   Rs. 10,000

Other expenses                        Rs. 4,000

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

14. The following purchases were made by a firm having three departments. Dept A 1000 units, Dept B 2000 units and Dept C 2400 units at Total cost of Rs.1,00,000.

Department	Opening stock (Units)	Sales (Units)
Dept A	120	1020 units at Rs. 20 each;
Dept B	80	1920 units at Rs. 22.50;
Dept C	152	2496 units at Rs. 25 each;

The rate of Gross profit is the same in each case. Prepare the Departmental Trading Account.

15. The following particulars ascertain the amount of credit sales for the year ended 31 March 2008.

On 1.4.2007 Total debtors Rs. 7,00,000 Bill receivables Rs.60,000.

On 31.3.2008 Total debtors Rs.8,80,000 and Bills receivables Rs.1,80,000.

During the year 2007-08 Cash received from customers Rs.14,50,000. Received for Bills receivables Rs.80,000;

Discount allowed to customers Rs.20,000

Sales Returns Rs.60,000 and Bad debts Rs.30,000.

16. Rohit Industries Ltd had taken out an insurance policy on stock for Rs. 30,000 with an average clause. On 15 October 2002 there was fire as a result of which the whole of the stock with the exception of that valued at Rs. 10,000 was destroyed. From the following information ascertain the claim that can be lodged against the Insurance company:

Stock on 1-4-2002 Rs. 27,000 (at 10% less than cost)

Purchase from 1-4-2002 to 15-10-2002 Rs. 90,000

Wages for the period Rs.20,000

Sales for the period Rs.1,30,000.

The company sells goods at cost plus 30% assuming that the claim as calculated by you is settled by the Insurance company give journal entries in the books of Rohit Industries Ltd.

17. Explain the following: a) Stock and Debtors system of Branch accounting
18. b) Self Balancing Ledgers
19. Give the necessary journal entries in connection with royalties payable / receivable, dead rent, short workings arising, short workings recovered and irrecoverable in the Books of Lesser and Lessee.

 

PART – C

Answer any TWO questions:                                                                       (2 x 20 = 40)

19. Delhi Head office supplied goods to its branch at Kanpur at invoice price which is cost plus 50%. All cash received by the branch is remitted to Delhi and all branch expenses are paid by the head office. From the following particulars relating to Kanpur branch for the year ending 31 March 2008 prepare Branch stock a/c, Branch debtors a/c, Branch expenses a/c and Branch adjustment a/c in the books of the head office so as to find out the gross profit and net profit made by the Branch.

Rs.

Stock with branch on 1.4.2007                       60,000

Branch debtors                        “                      12,000

Petty cash balance       “                                  100

Goods received from head office                   1,86,000 (at invoice price)

Goods returned to head office                                   13,000

Credit sales less returns                                   86,000

Cash received from debtors                            90,000

Discount allowed to debtors                           2,400

Expenses: cash paid to Head office Rent       2,400

Salaries                                                            24,000

Petty cash                                                        1,000

Cash sales                                                        1,04,000

Stock with branch on 31.3.2008                     54,000 (at invoice price)

Petty cash balance                                           100

20. Mathew keeping his books under single entry system presents the following facts before you:

1.4.2006          31.3.2007

Rs.                   Rs.

Sundry debtors                                   18,100             19,300

Stock                                                   15,000             14,000

Machinery                                           25,000             –

Furniture                                             4,000               –

Sundry creditors                                 11,000             12,500

Summary of cash transaction for year ending 31 March 2007:

 

Receipts:                                 Rs.       Payments                                             Rs.

Opening balance                     500      Payment to Creditors                          35,000

Cash sales                                6,100   Wages                                                 16,000

Received from Debtors           75,300 Salaries                                                35,000

Miscellaneous receipts            200      Drawings                                             4,000

Loan from David

@ 9% on 1 October 2006       10,000 Expenses                                             11,000

Machinery bought 1 Oct 2006            9,500

Closing balance                                   1,600

Depreciation is provided on furniture and fittings at 10% per annum. No figures are available for total sales. However Moneymaker informs you that he maintains a steady gross profit rate of 25% on sales. Prepare Money maker’s trading profit and loss account for the year ended 31 March 2007 and the Balance sheet as at date.

 

21. X Transport Ltd. purchased from Manish Motors 3 Tempos costing Rs.1,50,000 each on hire purchase basis on 1 April 2005. 20% of the cost was to be paid down and the balance in 3 equal instalments together with interest at 9% at the end of each year. X Transport Ltd paid the instalment due on 31 March 2006 but could not pay thereafter. Manish Motors agreed to leave one tempo with the purchaser adjusting the value of the other two tempos against the amount due on that date. The tempos recovered were valued on the basis of 30% depreciation annually. X transport Ltd charges depreciation on tempos @ 20% on diminishing balance method. M/s Manish motors incurred Rs.10,000 on repairs of tempos repossessed and resold them at a profit of 5% on total cost.

Write up necessary ledger accounts in the books of both parties giving effect to the above transactions.

 

 

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