Corporate Knowledge Integration

1. JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)

END SEMESTER EXAMINATION – MARCH/APRIL 2013

B.COM – VI SEMESTER

Corporate Knowledge Integration

Duration: 3 Hours                                                                                            Max. marks: 100

Answer Question number 1 which is compulsory [30 marks]   and any five from the remaining  questions.  [14 marks each].

Question number :1 – Compulsory question.                                                     (30 marks)

Top of Form Statement:                    Balance Sheet Income Statement Cash Flow View:              Annual Quarterly Bottom of Form

Assets [+] in Millions of Dollars
	09/2012	09/2011	09/2010	09/2009	09/2008
Cash and Equivalents	10,746	9,815	11,261	5,263	11,875
Restrictable Cash	–	–	–	–	–
Marketable Securities	18,383	16,137	14,359	18,201	12,615
Receivables	18,692	11,717	9,924	5,057	4,704
Inventories	791	776	1,051	455	509
Prepaid Expenses	–	–	–	–	475
Current Deferred Income Taxes	2,583	2,014	1,636	1,135	1,447
Other Current Assets	6,458	4,529	3,447	1,444	3,065
Total Current Assets	57,653	44,988	41,678	31,555	34,690
Gross Fixed Assets	21,887	11,768	7,234	4,667	3,747
Accumulated Depreciation	(6,435)	(3,991)	(2,466)	(1,713)	(1,292)
Net Fixed Assets	15,452	7,777	4,768	2,954	2,455
Intangibles	4,224	3,536	342	247	285
Cost in Excess	1,135	896	741	206	207
Non-Current Deferred Income Taxes	–	–	–	–	–
Other Non-Current Assets	97,600	59,174	27,654	12,539	1,935
Total Non-Current Assets	118,411	71,383	33,505	15,946	4,882
Total Assets	176,064	116,371	75,183	47,501	39,572
Liabilities [+] in Millions of Dollars
	09/2012	09/2011	09/2010	09/2009	09/2008
Accounts Payable	21,175	14,632	12,015	5,601	5,520
Short Term Debt	–	–	–	–	–
Notes Payable	–	–	–	–	–
Accrued Expenses	9,879	–	–	–	8,572
Accrued Liabilities	9,879	8,107	5,065	1,293	–
Deferred Revenues	5,953	4,091	2,984	2,053	–
Current Deferred Income Taxes	4,405	–	–	–	–
Other Current Liabilities	1,535	1,140	658	2,559	–
Total Current Liabilities	38,542	27,970	20,722	11,506	14,092
Long Term Debt	–	–	–	–	–
Deferred Income Tax	2,648	–	–	2,216	675
Other Non-Current Liabilities	19,312	11,786	6,670	2,139	3,775
Minority Interest	–	–	–	–	–
Capital Lease Obligations	–	–	–	–	–
Preferred Securities of Subsidiary Trust	–	–	–	–	–
Preferred Equity Outside Shareholders’ Equity	–	–	–	–	–
Total Non-Current Liabilities	19,312	11,786	6,670	4,355	4,450
Total Liabilities	57,854	39,756	27,392	15,861	18,542
Preferred Shareholder’s Equity	–	–	–	–	–
Common Shareholder’s Equity	118,210	76,615	47,791	31,640	21,030
Total Equity	118,210	76,615	47,791	31,640	21,030
Total Liabilities & Shareholder’s Equity	176,064	116,371	75,183	47,501	39,572

Income Statement for Apple Inc.  (AAPL)
Top of Form $ 448.85   -11.14 (-2.42%) Volume: 0  4:00 PM EST 20-Feb-2013 Bottom of Form

After Hours:  $ 448.01

-0.84 (-0.19%)

Volume: 118.29 k

7:59 PM EST 20-Feb-2013

 

Top of Form Statement:                    Balance Sheet Income Statement Cash Flow View:              Annual Quarterly Bottom of Form Income [+] in Millions of Dollars 09/2012 09/2011 09/2010 09/2009 09/2008 Operating Revenue 156,508 108,249 65,225 42,905 32,479 Adjustments to Revenue N/A – – – – Cost of Revenue (87,846) (62,617) (38,514) (24,949) (20,861) Gross Operating Profit 68,662 45,632 26,711 17,956 11,618 Selling/General/Admin Expense (10,040) (7,599) (5,517) (4,149) (3,761) Research & Development (3,381) (2,429) (1,782) (1,333) (1,109) EBITDA (Operating Income Before Depreciation) – 35,604 19,412 12,474 6,748 Depreciation & Amortization – (1,814) (1,027) (734) (473) Operating Income 58,518 33,790 18,385 11,740 6,275 Interest Income 1,088 519 311 407 – Other Income, Net (566) (104) (156) (81) 620 Total Income Before Interest Expense (EBIT) 55,763 34,205 18,540 12,066 6,895 Interest Expense N/A – – – – Income Before Tax 55,763 34,205 18,540 12,066 6,895 Income Taxes (14,030) (8,283) (4,527) (3,831) (2,061) Minority Interest – – – – – Net Income from Continuing Operations 41,733 25,922 14,013 8,235 4,834 Net Income from Discontinued Operations – – – – – Net Income from Total Operations 41,733 25,922 14,013 8,235 4,834 Normalized Income 41,733 25,922 14,013 8,235 4,834 Extraordinary Income/Loss – – – – – Special Income/Charges – – – – – Income from Cum. Effect of Acct Change – – – – – Income from Tax Loss Carryforward – – – – – Other Gains – – – – – Total Net Income 41,733 25,922 14,013 8,235 4,834              09/2012 09/2011 09/2010 09/2009 09/2008   Dividends Paid Per Share 2.65 0.00 0.00 0.00 0.00 Preferred Dividends – – – – – Basic EPS from Continuing Operations 44.64 28.05 15.41 9.22 5.48 Basic EPS from Discontinued Operations 0.00 0.00 0.00 0.00 0.00 Basic EPS from Total Operations 44.64 28.05 15.41 9.22 5.48 Diluted EPS from Continuing Operations 44.15 27.68 15.15 9.08 5.36 Diluted EPS from Discontinued Operations 0.00 0.00 0.00 0.00 0.00 Diluted EPS from Total Operations 44.15 27.68 15.15 9.08 5.36

Results [+]

in Dollars (Preferred Dividends in Millions)

 

From the above Balance sheet statement Calculate the following for the latest three years :        [Three marks each  for answer( a to h) and 6 marks for( i)]

1. Current ratios
2. Operating profit ratio
3. Total dividend paid every year[Assume $1 nominal value per share]
4. Interest coverage ratio
5. Fixed assets purchased every year
6. Gross operating profit ratio
7. Average income tax rate
8. Inventory turnover ratio
9. Study the performance based on the above calculation give a brief report in five lines.[6 marks]

Question number:2

I am Vijay,  very fortunate to take responsibility to earn and look after my family and also manage my studies at SJCC. My college fee was due from June and  examination fee is to be paid within 10 days. My attendance is near border. This is my true story. I begin my day at 2.30 am. My friend Prasad and I take a mini van and drive  from KR Puram to KR Market to buy tomatoes and supply them  to hotels. Every day  I get standard orders from hotels. I supply tomatoes early in the morning before coming to class at SJCC and collect money in the evening after my classes. This is one of the reasons why I find difficult to complete assignments given by lecturers.

We buy basket of tomatoes. The weight of each basket ranges from 5 to 6.5 kg. We can not open the basket and measure each basket  to find the exact number of kilograms at KR Market. We have to accept whatever the trader supplies. There are broken tomatoes and rotten tomatoes at the bottom of  the basket. Hotels never accept broken or rotten tomatoes.

We buy 30 baskets of tomatoes at Rs. 35 per basket every day. Each basket is weighing, on an average, 5 kg.  We load them in a mini van and bring them to an open space under  KR Puram flyover and open the basket and remove the broken and rotton tomatoes. We have kept  a religious statue so that other people do not occupy our place(not that we are sentimental towards our religion).

Invariably we loose a Kg per basket. We put back 4 kg per basket and deliver them to the hotels.  The minivan charges Rs.200 per day as a rental charge. We take by-two coffee twice costing Rs. 14(total). We put 1 litre of diesel costing Rs. 45 every day.

 

 

We collect in the evening Rs.15 per Kg. from our customers(Hotels).

1. Calculate cost per kg of tomato and per basket of tomato before supplying to hotels.
2. Prepare Income Statement for one month(30 days).
3. Each one’s share of profits at the end of one month(30 days).
4. If Vijay wants to pay the balance of college fees of Rs.10,000; how many days he has to work in a month to earn Rs.10,000?
5. If his college fee for the next semester will be 30,000 and he has to pay Rs. 3,000 per month in how many months can he manage to earn the required sum?

 

 

 

 

 

Question number: 3

The Balance sheet on the 1^st day is as follows: Assume that he/she is a dealer in plant and machinery.

Liabilities	Amount	Assets	Amount
Capital Loan from friend	40,00,000 4,00,000	Cash Inventory	37,00,000 7,00,000

On the second day computers worth Rs. 2,00,000 purchased for cash. On the third  day plant purchased Rs. 8,00,000 on credit. On the fourth day stationary purchase for Rs.50,000 for cash. On the Fifth day goods sold for Rs. 3,00,000 on credit (cost Rs. 2,50,000). On the sixth day loan of Rs. 3,00,000 received from Indian Bank and invited tender to acquire 10 plants for Rs. 15,00,000.

Answer the following questions ( Any 7 sub divisions):

1. The balance sheet total on the asset side at the end of the sixth day is ________lakhs
2. The Balance sheet total on the liability side at the beginning of fifth day is ____________.
3. Inventory on the third day is _____________.
4. The Trade receivables at the end of the 6^th day is
5. The Balance sheet cash position at the beginning of the fourth day is __ ______.
6. The merchandise value at the end of fifth day will be ____________ if goods are sold at 30% profit on sale on the fifth day.
7. Profits earned during the first week is  ___________if profit is 30% on cost of merchandise.
8. On the fourth day journal entry for the purchase of stationary _____________ is credited.
9. Identify the first day transaction and pass journal entry________________

 

 

Question Number: 4

PARTICULARS	QUANTITY	RATE	AMOUNT
Opening stock	1000	10	100000
Purchases : April	5000	12	600000
Sep	4000	13	52000
Jan	3000	9	27000
Closing inventory	2000	?	?

 

You are required to calculate the following-

1. Closing stock under FIFO, LIFO, Weighted average methods
2. Cost of goods sold
3. Net profit, if selling price per unit equal to Rs.25 and assume operating expenses and the amount of depreciation is Rs.etc.
4. Income tax
5. Cash Inflows

 

 

 

 

Question Number: 5

A Cement  Manufacturer has provided you with the details of the two Grades of Cement manufactured and sold for a given period. Using the information:

Particulars		Cement Grade 53		Cement Grade 43
Sales amount		1,23,000		1,63,800
Sales quantity(Kg.)		1500		2100
Variable cost		93,000		1,17,600
Fixed Cost		24,960
Product Mix		60%		40%

1. Estimate their respective Break Even Quantity
2. The Margin of safety in Units and Value
3. The Revised Break Even if the overall Profit after Tax estimated by the company, is 20% (on a tax rate of 25%)

 

 

Question Number:6

I had purchased $25,000 worth of shares at Rs 120 per share in Indian market(1$ =Rs52) on 1^st January 200X. I plan to sell 60% of such number of shares on 31^st December 2013  at Rs 150 per share. The expected market value 1$ = Rs50. The cost of capital (Discounting rate) is 12% per annum.

Calculate the following:

1. What is the purchase price in Indian rupee?
2. What is the total sales in dollar?
3. What is the net profit /loss incurred in dollar?
4. What is the profit earned without fluctuation in the foreign currency?
5. What is the profit /loss due to currency fluctuation? (Verify your answer whether your calculation is correct).

 

Question Number: 7

An agriculturist has 480 hectares of land on which he grows potatoes, peas and carrots. Out of the total area of land 340 hectares are suitable for all four vegetables but the remaining 140 hectares of land are suitable only for growing peas and carrots. Labour for all kinds of farm works is available in plenty.

The market requirement is that all the four types of vegetables must be produced with the minimum of 5000 boxes of any one variety. The farmer has decided that the area devoted to any one crop should be in terms of complete hectares and not in fractions of a hectare. The only other limitations is that not more than 1,13,750 boxes of any one vegetables should be produ                                                                                                                                                                         The relevant data concerning production, market prices and costs are as under:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Required:

 

Calculate the area to be cultivated with respect to each crop within the constraints and profits before land development work is undertaken.

 

 

Question Number: 8

 

Pass an appropriate journal entries:

1.      Cash withdrawn from bank  Rs.20,000

2.      Building sold Rs. 40,00,000(dealer in building)

3.        Debtors become bad Rs. 2000.

4.        Made provision for bad and doubtful debts Rs.1000 .

5.        Income tax refund to sole proprietor Rs. 30000 but credited to business account

6. Financial Lease agreement was made on 2/5/2012 for Rs. 50,00,000 p.a. Advance of Rs. 25,000 was made on the same day.
7. Interest earned but due Rs. 5,000 on our investment of 50,000.

 

Question Number: 09

The first Jesuit, Cardinal Jorge Mario Bergoglio  becomes Pope Francis. Without fanfare picked up his baggage and insisted on paying his bill like any other Jesuit normally does during Jesuit formation… because he was concerned about giving a good example of what priest and bishop should do. Earlier he lived in a small apartment and cooked his own food  in the Argentine capital instead of the palace allotted to him.

Inspired by the Pope Francis’ simplicity Madurai Jesuit order have studied their province schools and colleges to restructure principal/head master and administrative offices. At present half of the size of office is equal to Headmaster/principal’s room. Some of the departmental staff rooms are quarter of principal’s room. Some of the class rooms where more than 60 students sit and study everyday with two or three fans are much smaller than the principal/headmaster’s room.

In order to study the ideal size of the head of the institution, some of the Jesuits visited multinational CEO offices in Bangalore and Chennai. The normal size of the CEO’s office is 10 x 8 for their administration  work. The CEO meets visitors in a common parlor. Common parlor can be used by any manager. Every inch of a city has cost. In an educational institution, we may not realize the real cost, but opportunity social costs are involved. It had been never noticed the social opportunity cost. Some of the city private schools and colleges already made relevant changes by reducing the space at  the principal administrative office.

As a student of SJCC, having studied CKI(Corporate Knowledge Integration) suggest the management of Madurai Province how reduction of the size of Headmaster/Principal’s room will benefit the institution in cost savings. Identify the functions of a school headmaster/principal of a college and space required for his /her administration. Explain why relevant cost and benefits a Use relevant cost and relevant benefits, opportunity cost/benefits, social cost and social benefits analysis. What are the social costs and social benefits? Explain.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Scheme of valuation – CKI

Corporate Knowledge Integration-2013

III B.Com

Answer Question number 1 which is compulsory [30 marks]and any five from the rest[14 marks each].

Question number:1[compulsory]

Top of Form Statement:                    Balance Sheet Income Statement Cash Flow View:              Annual Quarterly Bottom of Form

Assets [+] in Millions of Dollars
	09/2012	09/2011	09/2010	09/2009	09/2008
Cash and Equivalents	10,746	9,815	11,261	5,263	11,875
Restrictable Cash	–	–	–	–	–
Marketable Securities	18,383	16,137	14,359	18,201	12,615
Receivables	18,692	11,717	9,924	5,057	4,704
Inventories	791	776	1,051	455	509
Prepaid Expenses	–	–	–	–	475
Current Deferred Income Taxes	2,583	2,014	1,636	1,135	1,447
Other Current Assets	6,458	4,529	3,447	1,444	3,065
Total Current Assets	57,653	44,988	41,678	31,555	34,690
Gross Fixed Assets	21,887	11,768	7,234	4,667	3,747
Accumulated Depreciation	(6,435)	(3,991)	(2,466)	(1,713)	(1,292)
Net Fixed Assets	15,452	7,777	4,768	2,954	2,455
Intangibles	4,224	3,536	342	247	285
Cost in Excess	1,135	896	741	206	207
Non-Current Deferred Income Taxes	–	–	–	–	–
Other Non-Current Assets	97,600	59,174	27,654	12,539	1,935
Total Non-Current Assets	118,411	71,383	33,505	15,946	4,882
Total Assets	176,064	116,371	75,183	47,501	39,572
Liabilities [+] in Millions of Dollars
	09/2012	09/2011	09/2010	09/2009	09/2008
Accounts Payable	21,175	14,632	12,015	5,601	5,520
Short Term Debt	–	–	–	–	–
Notes Payable	–	–	–	–	–
Accrued Expenses	9,879	–	–	–	8,572
Accrued Liabilities	9,879	8,107	5,065	1,293	–
Deferred Revenues	5,953	4,091	2,984	2,053	–
Current Deferred Income Taxes	4,405	–	–	–	–
Other Current Liabilities	1,535	1,140	658	2,559	–
Total Current Liabilities	38,542	27,970	20,722	11,506	14,092
Long Term Debt	–	–	–	–	–
Deferred Income Tax	2,648	–	–	2,216	675
Other Non-Current Liabilities	19,312	11,786	6,670	2,139	3,775
Minority Interest	–	–	–	–	–
Capital Lease Obligations	–	–	–	–	–
Preferred Securities of Subsidiary Trust	–	–	–	–	–
Preferred Equity Outside Shareholders’ Equity	–	–	–	–	–
Total Non-Current Liabilities	19,312	11,786	6,670	4,355	4,450
Total Liabilities	57,854	39,756	27,392	15,861	18,542
Preferred Shareholder’s Equity	–	–	–	–	–
Common Shareholder’s Equity	118,210	76,615	47,791	31,640	21,030
Total Equity	118,210	76,615	47,791	31,640	21,030
Total Liabilities & Shareholder’s Equity	176,064	116,371	75,183	47,501	39,572

Income Statement for Apple Inc.  (AAPL)
Top of Form $ 448.85   -11.14 (-2.42%) Volume: 0  4:00 PM EST 20-Feb-2013 Bottom of Form

After Hours:  $ 448.01

-0.84 (-0.19%)

Volume: 118.29 k

7:59 PM EST 20-Feb-2013

 

Top of Form Statement:                    Balance Sheet Income Statement Cash Flow View:              Annual Quarterly Bottom of Form Income [+] in Millions of Dollars 09/2012 09/2011 09/2010 09/2009 09/2008 Operating Revenue 156,508 108,249 65,225 42,905 32,479 Adjustments to Revenue N/A – – – – Cost of Revenue (87,846) (62,617) (38,514) (24,949) (20,861) Gross Operating Profit 68,662 45,632 26,711 17,956 11,618 Selling/General/Admin Expense (10,040) (7,599) (5,517) (4,149) (3,761) Research & Development (3,381) (2,429) (1,782) (1,333) (1,109) EBITDA (Operating Income Before Depreciation) – 35,604 19,412 12,474 6,748 Depreciation & Amortization – (1,814) (1,027) (734) (473) Operating Income 58,518 33,790 18,385 11,740 6,275 Interest Income 1,088 519 311 407 – Other Income, Net (566) (104) (156) (81) 620 Total Income Before Interest Expense (EBIT) 55,763 34,205 18,540 12,066 6,895 Interest Expense N/A – – – – Income Before Tax 55,763 34,205 18,540 12,066 6,895 Income Taxes (14,030) (8,283) (4,527) (3,831) (2,061) Minority Interest – – – – – Net Income from Continuing Operations 41,733 25,922 14,013 8,235 4,834 Net Income from Discontinued Operations – – – – – Net Income from Total Operations 41,733 25,922 14,013 8,235 4,834 Normalized Income 41,733 25,922 14,013 8,235 4,834 Extraordinary Income/Loss – – – – – Special Income/Charges – – – – – Income from Cum. Effect of Acct Change – – – – – Income from Tax Loss Carryforward – – – – – Other Gains – – – – – Total Net Income 41,733 25,922 14,013 8,235 4,834 09/2012 09/2011 09/2010 09/2009 09/2008 Dividends Paid Per Share 2.65 0.00 0.00 0.00 0.00 Preferred Dividends – – – – – Basic EPS from Continuing Operations 44.64 28.05 15.41 9.22 5.48 Basic EPS from Discontinued Operations 0.00 0.00 0.00 0.00 0.00 Basic EPS from Total Operations 44.64 28.05 15.41 9.22 5.48 Diluted EPS from Continuing Operations 44.15 27.68 15.15 9.08 5.36 Diluted EPS from Discontinued Operations 0.00 0.00 0.00 0.00 0.00 Diluted EPS from Total Operations 44.15 27.68 15.15 9.08 5.36

Results [+]

in Dollars (Preferred Dividends in Millions)

 

From the above Balance sheet statement Calculate the following for the latest three years :[Three marks each  for answer( a to h) and 6 marks for( i)]

1. Current ratios
2. Operating profit ratio
3. Total dividend paid every year[Assume $1 nominal value per share]
4. Interest coverage ratio
5. Fixed assets purchased every year
6. Gross operating profit ratio
7. Average income tax rate
8. Inventory turnover ratio
9. Study the performance based on the above calculation give a brief report in five lines.[6 marks]

Answer:[Answers are latest years to preceding years.]

Total Current Assets	57,653	44,988	41,678	31,555	34,690

Total Current Liabilities

38,542

27,970

20,722

11,506

14,092

Common Shareholder’s Equity

118,210

76,615

47,791

31,640

21,030

Gross Fixed Assets

21,887

11,768

7,234

4,667

3,747

Operating Revenue

156,508

108,249

65,225

42,905

32,479

Inventories

791

776

1,051

455

509

 

Gross Operating Profit

68,662

45,632

26,711

17,956

11,618

Operating Income

58,518

33,790

18,385

11,740

6,275

Income Before Tax

55,763

34,205

18,540

12,066

6,895

 

Income Taxes

(14,030)

(8,283)

(4,527)

(3,831)

(2,061)

Dividends Paid Per Share

2.65

0.00

0.00

0.00

0.00

 

 

1. a) Current ratios are: 1.496; 1.608; 2.01; 2.742; 2.462
2. b) Operating profit ratios are: 37.39;31.22;28.19; 27.36; 19.32

c)Dividend paid: 2.65 x 1,18210=$3,13,256.5

1. d) Interest coverage ratio: Nil as there is no interest.
2. e) Fixed assets purchased every year:10119; 4534; 2567; 920
3. f) GP ratio:43.87%; 42.15; 40.95; 41.85; 35.77
4. g) Average Income tax rate: 25.16%; 24.21%; 24.41%; 31.75%; 29.89%
5. h) Inventory turnover ratio:197.86 times:139.496; 62.059; 94.296; 63.809
6. i) The company steadily progressing as there is an increase in inventory turnover ratio and decrease in current ratio followed by purchase of fixed assets which is reflected in steady increase in operating profit ratio. It helped the company to declare dividend in the current year. It is a debt free company.

 

Question number:2

I am Vijay,  very fortunate to take responsibility to earn and look after my family and also manage my studies at SJCC. My college fee was due from June and  examination fee is to be paid within 10 days. My attendance is near border. This is my true story. I begin my day at 2.30 am. My friend Prasad and I take a mini van and drive  from KR Puram to KR Market to buy tomatoes and supply them  to hotels. Every day  I get standard orders from hotels. I supply tomatoes early in the morning before coming to class at SJCC and collect money in the evening after my classes. This is one of the reasons why I find difficult to complete assignments given by lecturers.

We buy basket of tomatoes. The weight of each basket ranges from 5 to 6.5 kg. We can not open the basket and measure each basket  to find the exact number of kilograms at KR Market. We have to accept whatever the trader supplies. There are broken tomatoes and rotten tomatoes at the bottom of  the basket. Hotels never accept broken or rotten tomatoes.

We buy 30 baskets of tomatoes at Rs. 35 per basket every day. Each basket is weighing, on an average, 5 kg.  We load them in a mini van and bring them to an open space under  KR Puram flyover and open the basket and remove the broken and rotton tomatoes. We have kept  a religious statue so that other people do not occupy our place(not that we are sentimental towards our religion).

Invariably we loose a Kg per basket. We put back 4 kg per basket and deliver them to the hotels.  The minivan charges Rs.200 per day as a rental charge. We take by-two coffee twice costing Rs. 14(total). We put 1 litre of diesel costing Rs. 45 every day.

We collect in the evening Rs.15 per Kg. from our customers(Hotels).

6. Calculate cost per kg of tomato and per basket of tomato before supplying to hotels.
7. Prepare Income Statement for one month(30 days).
8. Each one’s share of profits at the end of one month(30 days).
9. If Vijay wants to pay the balance of college fees of Rs.10,000; how many days he has to work in a month to earn Rs.10,000?
10. If his college fee for the next semester will be 30,000 and he has to pay Rs. 3,000 per month in how many months can he manage to earn the required sum?

 

 

Suggested answers:

Purchase per day ( 30 x 35)=1050

Number of Kgs (30 x 5Kg)    =150kg

Normal loss( 30 x 1)=30 kg

Remaining good units = 120kg

Other related costs per day: petrol Rs.45;Coffee Rs.14 and Rent of mini van Rs.200= 259

Total costs: Rs. 1050 +259=Rs.1,309

Effective cost per kg= Rs.10.908

Profit per Kg = 15- 10.908= Rs.4.09166

Profit per day= 120 x 4.09166=491

Monthly profit = Rs.14,730

Share of profit =7365

Every month savings after paying home = 7365- 3000=4365

No of months to save Rs.30,000 is = 30,000/4365= 6.87 months

 

Question number: 3

The Balance sheet on the 1^st day is as follows: Assume that he/she is a dealer in plant and machinery.

Liabilities	Amount	Assets	Amount
Capital Loan from friend	40,00,000 4,00,000	Cash Inventory	37,00,000 7,00,000

On the second day computers worth Rs. 2,00,000 purchased for cash. On the third  day plant purchased Rs. 8,00,000 on credit. On the fourth day stationary purchase for Rs.50,000 for cash. On the Fifth day goods sold for Rs. 3,00,000 on credit (cost Rs. 2,50,000). On the sixth day loan of Rs. 3,00,000 received from Indian Bank and invited tender to acquire 10 plants for Rs. 15,00,000.

Answer the following questions ( Any 7 sub divisions):

1. The balance sheet total on the asset side at the end of the sixth day is ________lakhs
2. The Balance sheet total on the liability side at the beginning of fifth day is ____________.
3. Inventory on the third day is _____________.
4. The Trade receivables at the end of the 6^th day is
5. The Balance sheet cash position at the beginning of the fourth day is __ ______.
6. The merchandise value at the end of fifth day will be ____________ if goods are sold at 30% profit on sale on the fifth day.
7. Profits earned during the first week is  ___________if profit is 30% on cost of merchandise.
8. On the fourth day journal entry for the purchase of stationary _____________ is credited.
9. Identify the first day transaction and pass journal entry________________

 

Answer:Liabilities(Rs. In Lakhs)

Particulars	2nd day	3rd day	4th day	5th day	6th day
Capital Loan from friends Trade Payables Profit Indian Bank loan	40 4	40 4 8	40 4 8	40 4 8 0.5	40 4 8 0.5 3
	44	52	52	52.5	55.5

Assets(in Lakhs)

	2nd day	3rd day	4th day	5th day	6th day
Cash Inventories Computer Stock of stationery Trade Receivables	35 7 2       44	35 15 2       52	34.5 15 2 0.5     52	34.5 12.5 2 0.5 3   52.5	37.5 12.5 2 0.5 3   55.5

 

55. The balance sheet total on the asset side at the end of the sixth day is ________lakhs.[55.5 lakhs]
56. The Balance sheet total on the liability side at the beginning of fifth day is ____________.[52 lakhs]
57. Inventory on the third day is _____________.[ 15 lakhs ]
58. The Trade receivables at the end of the 6^th day is  [3 lakhs]
59. The Balance sheet cash position at the beginning of the fourth day is __ ______.[35 lakhs]
60. The merchandise value at the end of fifth day will be ____________ assuming goods are sold at 30% profit on sale on the fifth day.[15- 2.1= 12.9]
61. Profits earned during the first week is  ___________if profit is 30% on cost of merchandise.[1.25 lakhs]
62. On the fourth day journal entry for the purchase of stationary _____________ is credited.[cash]
63. Identify the first day transaction and pass journal entry________________

[Cash Account Dr.  37,00,000 Inventory A/C Dr. Rs. 7,00,000 Capital A/C Cr.Rs. 40,00,000 and Loan from A/C  Credit Rs. 4,00,000.]

 

 

 

 

Question Number: 4

PARTICULARS	QUANTITY	RATE	AMOUNT
Opening stock	1000	10	100000
Purchases : April	5000	12	600000
Sep	4000	13	52000
Jan	3000	9	27000
Closing inventory	2000	?	?

 

You are required to calculate the following-

6. Closing stock under FIFO, LIFO, Weighted average methods
7. Cost of goods sold
8. Net profit, if selling price per unit equal to Rs.25 and assume operating expenses and the amount of depreciation is Rs.etc.
9. Income tax
10. Cash Inflows

Solution:

1. Closing Stock As Per FIFO, LIFO And Average Stock:

Closing Stock (in units): 2000

1. FIFO

In this method the units bought first are sold first, therefore the closing inventory comprises of the last purchases made. Value of inventory = 2000 x 9 = Rs. 18000

1. LIFO

In this method the latest units are sold first, therefore the closing inventory comprises of the opening stock and the initial purchases made during the year.

Value of closing stock:

1000 x 10 = Rs. 10000 (out of opening stock)

1000 x 12 = Rs. 12000 (out of purchases in April)

Total Rs. 22000

1. Average Stock

The Weighted average unit method are used to value the closing stock

Total units = 1000+5000+4000+3000 = 13000

Amount    = 10000+60000+52000+270000 = 149000

Cost/ unit = 149000/13000

= Rs. 11.46

Closing stock -= 2000 x 11.46 = Rs. 22920

1. Cost Of Goods Sold 
2. FIFO

Opening stock:        10000

Purchases:              139000

Less: Closing stock (18000)

COGS                    131000

1. LIFO

Opening stock:          10000

Purchases:        139000

Less: Closing stock (22000)

COGS                      127000

1. Weighted Average

Opening stock:         10000

Purchases:      139000

Less: Closing stock (22920)

COGS                     126080

• Calculation Of Net Profit

Particulars	FIFO	LIFO
Sales Less : COGS	275000 131000	275000 127000
Gross Profit	144000	148000
Less:  Operating Expenses(assumed)	15000	15000
(A)	129000	133000
Less : Depreciation as per IT Act               (B)(assumed)	20000	20000
Less : Depreciation as per Co., Act           (C)(assumed)	10000	10000
Net Profit As Per Income Tax Act      (A – B)	109000	113000
Net Profit As Per Companies  Act (A – C)	119000	123000

 

1. Operating Cash Flow:

Particulars	FIFO	LIFO
Net Profit as per It Act	109000	113000
Less : Tax @ 34%(assumed)	37060	38420
Profit After Tax	71940	74580
Add : Depreciation as per IT Act(assumed)	20000	20000
Operating Cash Flow	91940	94580

 

1. Current Ratio Under FIFO:

Current Assets( excluding Inventory )  1,00,000(assumed)

Add : Inventory                                  18,000

TOTAL              1,18,000

Current Liabilities                               40,000 (assumed)

Current ratio = 1,18,000 / 40,000 = 2.95 times.

 

 

Question Number: 5

A Cement  Manufacturer has provided you with the details of the two Grades of Cement manufactured and sold for a given period. Using the information:

Particulars		Cement Grade 53		Cement Grade 43
Sales amount		1,23,000		1,63,800
Sales quantity(Kg.)		1500		2100
Variable cost		93,000		1,17,600
Fixed Cost		24,960
Product Mix		60%		40%

1. Estimate their respective Break Even Quantity
2. The Margin of safety in Units and Value
3. The Revised Break Even if the overall Profit after Tax estimated by the company, is 20% (on a tax rate of 25%)

Solution:

Particulars

Cement Grade 53

Cement Grade 43

Selling Price per unit Variable cost per unit

82 62

78 56

Contribution

20

22

Weighted contribution

20 x 0.6 + 22 x 0.4 = Rs.20.8 per unit

Break Even

Common Fixed Cost/ Weighted Contribution per unit = Rs.24,960/20.8 = 1200 Kg

Number of Kgs to break even under each category

1200 x 0.6= 720 Kg

1200 x 0.4 = 480 Kg.

Margin of safety

Sales- BES= 1500 – 720= 780 Kg.

2100 – 480 = 1620 Kg

Margin of safety in Rupees

780Kg. X S.P = 780 x 82=63,960

1620Kg x 78 =1,26,360

Profit after tax Profit before tax PBT on Total Sales Break even sales

20% 26.67% 26.67% x (1,23,000 + 1,63,800) = 76,489 (Fixed cost + Required Profit)/ Weighted Contribution per unit = (24,960 + 76,489)/20.8 = 4877 units

Break even sales units under each category

4877 x 0.6= 2926.2 units

4877 x 0.4 = 1951 units

 

 

Question Number:6

I had purchased $25,000 worth of shares at Rs 120 per share in Indian market(1$ =Rs52) on 1^st January 200X. I plan to sell 60% of such number of shares on 31^st December 2013  at Rs 150 per share. The expected market value 1$ = Rs50. The cost of capital (Discounting rate) is 12% per annum.

Calculate the following:

1. What is the purchase price in Indian rupee?
2. What is the total sales in dollar?
3. What is the net profit /loss incurred in dollar?
4. What is the profit earned without fluctuation in the foreign currency?
5. What is the profit /loss due to currency fluctuation? (Verify your answer whether your calculation is correct).

Solution

1. Investment in Indian Rupee = $25,000 x 52= Rs. 13,00,000.

The number of shares purchased = 13,00,000/120= 10,833 shares.

 

1. Sale value in dollar = 60% of 10,833 x 150/50= $19,500

 

1. c) Net profit in dollar= $19,500 – $16,000= $3,500
2. d) (150-120)6499.8=Rs.1,94,994; in dollar = Rs.1,94,994/52=$3749
3. e) (50-52) x 6499.8 shares=Rs.12,996.6; dollar= 12,996/52=$249.92

 

Question Number: 7

An agriculturist has 480 hectares of land on which he grows potatoes, peas and carrots. Out of the total area of land 340 hectares are suitable for all four vegetables but the remaining 140 hectares of land are suitable only for growing peas and carrots. Labour for all kinds of farm works is available in plenty.

The market requirement is that all the four types of vegetables must be produced with the minimum of 5000 boxes of any one variety. The farmer has decided that the area devoted to any one crop should be in terms of complete hectares and not in fractions of a hectare. The only other limitations is that not more than 1,13,750 boxes of any one vegetables should be produced.

The relevant data concerning production, market prices and costs are as under:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Required:

 

Calculate the area to be cultivated with respect to each crop within the constraints and profits before land development work is undertaken.

 

Solution  (i)Area to be cultivated in respect to each crop

 

Statement showing contribution per hectare for four vegetables

Particulars		Potatoes	Peas	Carrot	Tomatoes
Season’s yield in box/hectare		350	100	70	180
Selling price per hectare		10,766	3176	2576	8019
Less: Variable cost		952	432	384	624
Material
Labour		1792	1216	744	1056
Picking  and Packing		2520	656	616	1872
Transport		3640	1040	560	3456
Total Variable Costs		8904	3344	2304	7008
Contribution/Hectare		1862	(168)	272	1011
Ranking		I	IV	III	II

 

Area Available		480 hectare	Contribution Per hectare	Total contribution
Peas Carrot Tomatoes Potatoes	5,000/100 Balance(140-50) 5,000/180 Balance(340-28)	50 90 28 312	(168) 272 1011 1862	(8,400) 24,480 28,308 5,80,944
Total contribution		480 hectare		Rs.6,25,332

 

 

 

Question Number: 8

 

Pass an appropriate journal entries:

8.       Cash withdrawn from bank  Rs.20,000 [Answer: Since the word for  personal use is missing :Cash Account debit and bank account credit]

9.       Building sold Rs. 40,00,000(dealer in building).[ Inventory A/C debit and Trade receivables A/C]

10.     Debtors become bad Rs. 2000.[Answer: Bad debts account debit and Debtors account credit]

11.     Made provision for bad and doubtful debts Rs.1000 [P/L Account Debit and Provision for bad and doubtful debts credit].

12.     Income tax refund to sole proprietor Rs. 30000 but credited to business account[Answer: Bank account  debit and Capital account credit].

13. Financial Lease agreement was made on 2/5/2012 for Rs. 50,00,000 p.a. Advance of Rs. 25,000 was made on the same day.[Answer: Financial lease will be the property of the lessee(user) and can be depreciated by lessee]
14. Interest earned but due Rs. 5,000 on our investment of 50,000.[ Interest due a/c Debit to Interest A/C credit]

 

Answer:

Pass an appropriate journal entries:

1.       Cash withdrawn from bank  Rs.20,000 [Answer: Since the word for  personal use is missing :Cash Account debit and bank account credit]

2.       Building sold Rs. 40,00,000(dealer in building).[ Inventory A/C debit and Trade receivables A/C]

3.       Debtors become bad Rs. 2000.[Answer: Bad debts account debit and Debtors account credit]

4.         Made provision for bad and doubtful debts Rs.1000 [P/L Account Debit and Provision for bad and doubtful debts credit].

5.         Income tax refund to sole proprietor Rs. 30000 but credited to business account[Answer: Bank account  debit and Capital account credit].

6. Financial Lease agreement was made on 2/5/2012 for Rs. 50,00,000 p.a. Advance of Rs. 25,000 was made on the same day.[Answer: Financial lease will be the property of the lessee(user) and can be depreciated by lessee]
7. Interest earned but due Rs. 5,000 on our investment of 50,000.[ Interest due a/c Debit to Interest A/C credit]

 

 

 

Question Number: 09

The first Jesuit, Cardinal Jorge Mario Bergoglio  becomes Pope Francis. Without fanfare picked up his baggage and insisted on paying his bill like any other Jesuit normally does during Jesuit formation… because he was concerned about giving a good example of what priest and bishop should do. Earlier he lived in a small apartment and cooked his own food  in the Argentine capital instead of the palace allotted to him.

Inspired by the Pope Francis’ simplicity Madurai Jesuit order have studied their province schools and colleges to restructure principal/head master and administrative offices. At present half of the size of office is equal to Headmaster/principal’s room. Some of the departmental staff rooms are quarter of principal’s room. Some of the class rooms where more than 60 students sit and study everyday with two or three fans are much smaller than the principal/headmaster’s room.

In order to study the ideal size of the head of the institution, some of the Jesuits visited multinational CEO offices in Bangalore and Chennai. The normal size of the CEO’s office is 10 x 8 for their administration  work. The CEO meets visitors in a common parlor. Common parlor can be used by any manager. Every inch of a city has cost. In an educational institution, we may not realize the real cost, but opportunity social costs are involved. It had been never noticed the social opportunity cost. Some of the city private schools and colleges already made relevant changes by reducing the space at  the principal administrative office.

As a student of SJCC, having studied CKI(Corporate Knowledge Integration) suggest the management of Madurai Province how reduction of the size of Headmaster/Principal’s room will benefit the institution in cost savings. Identify the functions of a school headmaster/principal of a college and space required for his /her administration. Explain why relevant cost and benefits a Use relevant cost and relevant benefits, opportunity cost/benefits, social cost and social benefits analysis. What are the social costs and social benefits? Explain.

 

 

 

Answer:

Relevant cost and relevant benefits are to be explained.

Social costs and social benefits are to be explained.

 

 

 

 

1. JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)

END SEMESTER EXAMINATION – MARCH / APRIL 2015

B.COM – VI SEMESTER
C1 11 604: CORPORATE KNOWLEDGE INTEGRATION
Duration: 3 Hours                                                                                             Max. Marks: 100
SECTION – A
	Answer Question No. 1 which is compulsory and any other four questions from the remaining: Each carries 20 Marks.                                                  (5×20=100)
	1.	Old Plant and Machinery (original costs) Rs. 15,00,000 purchased on 30/9/2012; salvage value is Rs. 1,00,000. Life is 4 years. The rate of depreciation as per the companies Act  in straight line method whereas income tax rate of depreciation is 25%. a)      Calculate the amount of depreciation for 4 years as per  Companies Act and Income Tax Act (Assuming that there is no additional depreciation) b)     If a new machinery worth Rs. 5,00,000 was purchased on 4th October 2013, calculate depreciation as per the Companies and IT Act. c)      If old machinery is sold for Rs. 15,00,000 on 10th January 2013, calculate capital gain as per the Companies Act and the IT Act. All calculations to be done for PY 13-14.
	2.	A cement manufacturer has provided you with the details of the two grades of cement manufactured and sold for a given period Particulars Cement Grade 53 Cement Grade 43 Sales amount Sales quantity (Kg) Variable cost Fixed cost Product mix 1,23,000 1500   93,000 24,960 60% 1,63,800 2100   1,17,600 – 40%   ·         Estimate their respective break even quantity ·         The margin of safety in units and value ·         The revised break even if the overall profit after tax estimated by the company is 20%
	3.	I had purchased & 20000 worth of shares at Rs. 125 per share from the Indian Market (1& = Rs. 42) on 1st January.  I plan to sell 80% of the shares on 31st December at Rs. 150 per share.  The expected market value is 1$ = Rs. 45/-  The cost of capital is 10% per annum Calculate the following ·         What is the purchase price in Rupees ·         What is the total sale in dollar? ·         What is the net profit/loss incurred in dollar? ·         If we use cost of capital 10% what is the present value of selling price in Rupees.   Calculate EOQ, EOQ if there is 10% discount on material cost if we buy 500 units at a time ·         Annual demand 600 units ·         Ordering cost Rs. 400 ·         Holding cost 40% ·         Cost per unit of raw material Rs. 15  A company is considering the pushing up of its sales by extending credit facilities to the following categories of customers. Category a: Customers with a 10% risk of non payment Category b: Customers with a 30% risk of non payment ·         The incremental sales expected in case of category (a) are Rs. 40000 while in case of category (b) Rs 50000 ·         The cost of production and selling costs are 60% of sales while the collection costs amount to 5% of sales in case of category (a) and 10% in case of category (b) ·         You are required to advise the firm about extending credit facilities to each of the above categories of customers.
	4.	Bombay steel manufactures four products, namely A,B,C and D, using the same plant and process. The following information relates to a production period: Product Volume Material cost per unit (Rs.) Direct labour per unit Machine time per unit Labour cost per unit A 500 5 ½ hour ¼ hour 3 B 5,000 5 ½ hour ¼ hour 3 C 600 16 2 hours 1 hour 12 D 7,000 17 1 ½ hours 1 ½ hours 9   Total production overhead recovered by the cost accounting system is analyzed under the following headings: (Rs) Factory overheads applicable to machine oriented activity 37,424 Set up costs are 4,355 Cost of ordering materials 1,920 Handling materials 7,580 Administration for spare parts 8,600 These overhead costs are absorbed by products on a machine hour rate Rs. 4.80 per hour giving an overhead cost per product of: A=Rs1.20, B=Rs.1.20, C=Rs.4.80, D=Rs.7.20 However, investigation into the production overhead activities for the period reveals the following totals: Product Number of set-ups Number of materials orders Number of times material was handled Number of spare parts A 1 1 2 2 B 6 4 10 5 C 2 1 3 1 D 8 4 12 4 You are required: (i)                 To compute an overhead cost per product using Activity based costing, tracing overheads to production units by means of cost drivers (ii)              To comment briefly on the differences disclosed between overheads traced by the present system and those traced by Activity based costing.
	5.	The data below relates to Venus Ltd., which makes and sells computers:   MARCH APRIL Sales 5000 Units 10,000 Units Production 10,000 Units 5,000 Units Selling price per unit (Rs) 100 100 Variable production cost per unit(Rs) 50 50 Fixed production overhead incurred 1,00,000 1,00,000 Fixed production overhead cost per unit, being the pre-determined overhead absorption rate 10 10 Selling distribution and administration cost (all fixed) 50,000 50,000 You are required to present comparative profit statements for each month using: (a)   Absorption costing (b) Marginal costing
	6.	Ambika Condiments bring out 2 products “SUCHI” and “RUCHI” which are popular in market. The management has the option to alter the sales-mix of the 2 products from out of the following combinations: Option SUCHI (Units) RUCHI (Units) I 800 600 II 1,600 – III – 1,300 IV 1,100 500   The per unit production cost/sales data are:   SUCHI RUCHI Direct Material (Rs.) 25 30 Direct Labour (hours) 10 12 Variable factory overhead is 100% of direct labour cost for both products. Selling price (Rs.)          75               90 Labour rate is 2 per hour Common fixed overhead for both products Rs. 10,000 You are required to – (i)                 Prepare a marginal cost statement for the two products; and (ii)              Evaluate the options and identify the most profitable sales-mix.
	7.	Prepare a Cash budget for the three months ending 30th June from the following information (Rs. ‘000) Month Sales Materials Wages Overheads February March April May June 14 15 16 17 18 9.6 9 9.2 10 10.4 3 3 3.2 3.6 4 1.7 1.9 2 2.2 2.3 Credit terms are Sales/debtors 10% sales are on cash, 50% of the credit sales are collected next month and the balance in the following month: Creditors: Materials 2 months Wages ¼ month Overheads ½ month Cash and bank balance on 1st April is expected to be Rs. 6000 Plant and machinery will be installed in February at a cost of RS. 96000.  The monthly installment of Rs. 2000 is payable from April onward Dividend @5% on preference share capital of Rs. 200000 will be paid on 1st June Advance to be received for sale of vehicles Rs. 9000 in June Dividends from investments amounting to Rs. 1000 are expected to be received in June Income tax advance to be paid in June – Rs. 2000
	8.	Prepare Balance sheet on daily basis.  Assume that all these transactions occurred in March 1st to 12th  and that there were no other transactions in March Day 1: Owner contributed Rs. 20000 and borrowed Rs. 10000 Day 2: The store purchased and received merchandise for inventory for Rs. 5000 agreeing to pay within 30 days Day 3:  Inventory costing Rs. 1500 was sold for Rs. 2200 which was received in cash Day 4: inventory costing Rs. 1700 was sold for Rs. 2600 the customers agreeing to pay Rs. 2600 in 40 days Day 5:  The store purchased a one year fire insurance policy for Rs 1200 by paying cash Day 6: the store purchased two plots of land of equal size for a total worth of Rs. 240000.  It paid Rs. 10000 in cash and gave a 10 year mortgage bond for Rs. 230000 Day 7:  The store sold one of the t2wo plots of land for Rs. 120000.  It received Rs. 5000 in cash and in addition the buyer assumed Rs. 115000 of the mortgage that is Music Mart Inc, became no longer responsible for this behalf Day 8:  business received a bonafide offer of Rs. 20000 for the business Day 9: Ben withdrew Rs. 1000 cash from the stores bank account for his personal use. Day 10: Ben took merchandise costing Rs. 750 from the store’s bank account for his personal use Day 12 Ben learned that the individual who purchased the land above subsequently sold it for Rs. 140000.  The plot still owned by Ben merchant was identical in value with this other plot. Make assumptions if necessary.