LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
B.Com. DEGREE EXAMINATION – COMMERCE
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FIRST SEMESTER – April 2009
CO 1500 – FINANCIAL ACCOUNTING
Date & Time: 20/04/2009 / 1:00 – 4:00 Dept. No. Max. : 100 Marks
SECTION – A
Answer ALL questions: 10 x 2 = 20
- Choose the correct answer:
Income Tax paid by a sole trader is shown:
- On the debit side of Trading Account
- On the debit side of Profit & Loss Account
- By way of deduction from the capital in the balance sheet.
- Fill in the blanks:
The difference between cash sent accounts appearing in the two trial balances i.e. branch trial balance and head office trail balance is called _______________.
- Royalty account is in the nature of ___________________ account.
- True of False
If the goods are transferred form department X to department Y at selling price which includes a profit of 25% on the cost, the amount of stock reserve on such closing stock(Valued at Rs.60,000) of department Y will be Rs. 15,000.
- Ascertain purchases from the following figures:
| Cost of goods sold | Rs. 80,700 |
| Opening stock | 5,800 |
| Closing stock | 6,000 |
- Mahendra and Narendra purchased two assets, particulars of which are given as under:
| Cost | Scrap value | Estimated life | |||
| Furniture | Rs. 73,200 | Rs. 480 | 6 years | ||
| Plant | Rs. 1,52,800 | 3,280 | 8 years | ||
You are required to determine the amount of depreciation to be written off in each case. Assume the company has adopted straight-line method of depreciation.
- Calculate the missing figure:
| Capital in the beginning? | Capital at the end Rs. 1,82,000 |
| Capital introduced Rs. 47,000 | Drawings Rs. 28,000 |
| Loss Rs. 14,000 |
- Calculate bills received from customers:
| Opening balance of bills Rs. 7,000 | Bills received endorsed to creditors Rs. 1000 |
| Bills dishonoured by customers Rs. 2,000 | Bills collected Rs. 13,000 |
| Closing balance of bills Rs. 6,000 |
- Calculate cash price of Machine from the following information:
| Down payment Rs. 10,000 | Rate of Interest 5% p.a |
| 4 annual Instalments at the end of each year Rs. 10,000 |
- Stock of Rs. 80,000 of M/S Kailash chand & sons has been insured for Rs. 70,000. Loss due to fire is assessed at Rs. 20,000. Calculate what claim M/s Kailash Chand & Sons will get from the Insurance company.
SECTION – B
Answer any FIVE questions: 5 x 8 = 40
- What causes depreciation? Discuss them.
- Distinguish between hire-purchase and Instalment-purchase system.
- Explain in brief the procedure of calculation of total stock and claim for stock lost on the date of fire.
- Naresh commenced business in March 2000. He acquired some machines for Rs. 2,00,000 on April 1, 2000. He acquired another machine for Rs. 50,000 on March 1, 2002. He sold Machines, original cost of which was Rs. 60,000 for Rs. 35,000 on October 31, 2001. Assuming depreciation @ 15% under written down value basis, compute the depreciation for the year ended March 31, 2001 and March 31, 2002. Depreciation to be calculated to the nearst rupee.
- The following details were extracted from the books of a company for six months ended 31st March, 2003.
2002 Oct 1 Total balances of accounts of 2002 Oct 1 Provision for
customers Rs. 3,72,000 doubtful debts Rs. 25,000
The transactions for six months ended 31st March, 2003:
| Credit Sales | Rs. 7,30,000 | Returns from customers | Rs. 7,400 |
| Cash received by customers | Rs. 7,08,000 | Cheques dishonoured | Rs. 2,800 |
| Bills accepted by customers | Rs. 26,000 | Bills dishonoured | Rs. 3,600 |
| Bills endorsed | Rs. 7,000 | Bad debts written off | Rs. 6,300 |
| Carriage charged to customers | Rs. 1,200 | Cash paid to customers for returns | 5,000 |
| Cash discount allowed | Rs. 17,800 | Bad debts previously written off recovered | 1,200 |
| Transfer from bought | Rs. 3,000 |
Prepare sales ledger adjustment account in general ledger.
- The super cycles has a branch at Chennai. 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 cheque by the head office except petty cash expenses which are paid by the Branch manager. From the following particulars, prepare branch account in the books of head office:
| Stock on 1st January 2002 | Rs. 2,500 | Stock on 31st December 2002 | Rs. 3,000 |
| Sundry debtors on 1st January 2002 | Rs. 1,400 | Sundry debtors on 31st December 2002 | Rs. 1,800 |
| Cash sales for the year | Rs. 10,800 | Credit sales for the year | Rs. 7,000 |
| Cash remitted to the head office | Rs. 15,000 | Furniture purchased by the Br. Manager | Rs. 1,200 |
| Goods invoiced from the head office | Rs. 18,200 | Expenses paid by head office | Rs. 1,640 |
| Expenses paid by the Branch | Rs. 120 | Cash remitted by H.O to the Branch for purchase of safe | Rs. 1,300 |
- A company leased a mine of 1st January, 1999 at a minimum rent of Rs. 20,000 merging into a royalty of Rs. 1.50 per ton with power to recoup shortworkings over the first three years of the lease. The output of the mine for the first three years was 9000 tons, 12000 tons, and 16000 tons respectively.
Pass the necessary journal entries for each of the three years in the books of the company.
- Fire occured in the premises of Mr. Srinivasan on May 1, 2003 and the stock was destroyed. Following information was available from the records:
| Purchases for the year 2002 | Rs. 8,88,000 | Sales for the year 2002 | Rs. 11,60,000 |
| Purchases form Jan 1, 2003 to May 1, 2003 |
Rs. 1,82,000 |
Sales from Jan 1, 2003 to May 1, 2003 | Rs. 2,40,000 |
| Stock on January 1, 2002 | Rs. 1,44,000 | Stock on December 31, 2002 | Rs. 2,42,000 |
| Wages paid during 2002 | Rs. 1,00,000 | Wages paid during Jan 1, 2003 to May 1, 2003 | Rs. 18,000 |
The stock salvaged was Rs. 25,000. A fire insurance policy for Rs.2,00,000 was taken to cover the loss by fire.
There was a practice in the concern to value the stock at cost less 10%. But this practice was changed and stock on December 31, 2002 was valued at cost plus 10%.
Calculate the amount of claim to be submitted with the Insurance Company for stock lost by fire.
SECTION – C
Answer any TWO questions: 2 x 20 = 40
- Komco Ltd carries on its business through five departments A,B,C,D and E. The following information for 2002 is made available:
- Salaries Rs. 11,020; Rent Rs.5,800; Insurance Rs.1,160; Miscellaneous Expenses Rs. 2,610 All these expenses are chargeable to each department in proportion to the cost of articles sold in respective department.
- The following balances as at 31.12.2002 were ascertained.
| Particulars | A | B | C | D | E |
| Rs. | Rs. | Rs. | Rs. | Rs. | |
| Opening stock at cost | 10,000 | 6,000 | 15,000 | 8,000 | 9,000 |
| Purchases | 1,00,000 | 60,000 | 20,000 | 52,000 | 60,000 |
| Sales | 96,000 | 62,000 | 19,000 | 46,000 | 60,000 |
| Closing Stock | 23,000 | 8,000 | 6,000 | 2,000 | 11,000 |
Prepare the profit & loss account to show the result of each department and also the combined
results with respective % on sales.
- Thiru Thomas does not maintain his books in the Double Entry System. From the following information, prepare Trading, Profit & Loss A/C and Balance Sheet as at March 31, 2003:
(i)
| Assests and liablilities | 31.3.2002 | 31.3.2003 |
| Rs. | Rs. | |
| Stock | 19,800 | 1,13,200 |
| Creditors | 31,000 | 14,500 |
| Debtors | 1,18,000 | 1,25,000 |
| Premises | 90,000 | 90,000 |
| Furniture | 11,000 | 11,500 |
| Air-Conditioner | 15,000 | 15,000 |
(ii) Creditors as at 31.3.2002 include Rs. 15,000 for purchase of Air-Conditioner.
(iii)
| Cash transactions: | Rs. |
| Cash as at April 1, 2002 | 15,000 |
| Collections from customers | 1,60,800 |
| Payments to creditors (Trade) | 1,44,000 |
| Rent, rates and taxes | 11,500 |
| Salaries | 1,12,000 |
| Sundry expenses | 18,000 |
| Sundry Income | 16,500 |
| Drawings by Thomas | 30,000 |
| Loan from Mrs. Fernandes | 23,000 |
| Capital introduced | 12,000 |
| Cash sales | 11,500 |
| Cash purchases | 15,000 |
| Payment to creditor for Air-conditioner | 15,000 |
(iv) Bad debts written off 1,200
- X purchased five trucks on hire purchase basis on October 1, 2001. The cash price of each truch was Rs. 5,50,000. X was to pay 20% of the cash price at the time of delivery and 25% of the cash price at the end of each of the four subsequent half years beginning from March 31, 2002.
On X’s failure to pay the instalment due on September 30, 2002, it was agreed that X could keep three trucks on the condition that the value of the two trucks would be adjusted against the amount due, the trucks being valued at cost less 25% depreciation.
Show the relevant accounts in the books of X, assuming that the books of account are
closed every year on March 31, and depreciation @ 15% is charged on the original cost of the trucks.