Financial Accounting

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

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  1. JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)

END SEMESTER EXAMINATION – OCTOBER 2014

B.COM. – I SEMESTER

 FINANCIAL ACCOUNTING

Duration: 3 Hours                                                                                       Max. Marks: 100

  SECTION – A

 

  1. Answer ALL the questions. Each carries 2 marks.                                       (10 x2 =20)

 

  1. A purchased a machine on hire purchases system. The Cash price of the machine was Rs. 74,500.  He paid Rs. 20,000 on signing of the agreement and the rest in three annual instalments of Rs. 20,000 each.  Calculate interest for each year.

 

  1. If original cost of the asset is Rs. 5,50,000; its scrap value is Rs. 50,000 and its estimated useful life is 10 years, then what is the annual depreciation under straight line method?

 

  1. Ram purchased Machinery worth Rs. 12,00,000 on credit. This was wrongly entered in Purchases Book.  You are required to pass the Rectification Entry.

 

  1. Avinash purchases a machine on hire purchase system paying Rs. 2,00,000 as Down Payment on the date of agreement and Rs. 2,80,000 annually for ten years. The rate of interest charged by the vendor is 5% p.a.  Given the present value of an annuity of Re. 1 for 10 years at 5% is 7.7217.  Determine the Cash Price of the Machine.

 

  1. Anitha purchased a Car on 01.04.2012 for Rs. 10,00,000. If she charges depreciation at the rate of 15% on Written Down Value Method, then what is the amount of depreciation for the year 2013-14 and the Written Down Value of the Car on 01.04.2014?

 

  1. What is Abnormal Loss of Stock?
  2. What is a Suspense Account? Why is it prepared?
  3. Mention any four methods of charging Depreciation.
  4. What are the three fundamental accounting assumptions?
  5. Mention any four types of Accounting Errors.

 

SECTION – B

  1. Answer any FOUR Each carries 5 marks.                              (4×5=20)

 

  1. State True or False with reasons:
  2. In Hire Purchase System, the purchaser gets title of the goods on the date of making the down payment.
  3. Salary paid to Vishnu for Rs. 10,000 was debited to his personal account. This error will overstate the profits of the year.
  4. Purchase of Machinery for Rs. 1,20,000 on credit will keep the total of the assets unchanged.
  5. Bad Debts written off earlier now recovered will be debited to Cash/Bank Account.
  6. Two sided errors are rectified by passing a Journal Entry.
  7. Business Entity Concept is not applicable to sole trading concerns and partnership concerns.
  8. Assets will be equal to capital if there are no liabilities.
  9. The essence of convention of prudence is to anticipate no profits and provide for all possible losses.
  10. Legal Expenses incurred on purchase of Land and Building is a Revenue Expenditure.
  11. Cash stolen by the cashier during business hours is a Capital Expenditure.

 

  1. In taking out a trail balance, a book-keeper finds that debit total exceeds the credit total by Rs.352. The amount is placed to the credit of a newly opened suspense account.  Subsequently the following mistakes were discovered.  You are required to pass the necessary entries for rectifying the mistakes, and show the Suspense Account:
  2. Sales Day Book was overcast by Rs.100;
  3. A sale of Rs.50 to Shri Ram was wrongly debited to Shri Krishna;
  4. General expenses Rs.18 were posted as Rs.80;
  5. Cash received from Shri Govind was debited to his account Rs.150;
  6. While carrying forward the total of one page of the Purchases Book to the next the amount of Rs.1,235 was entered as Rs.1,325;
  7. The books of Praveen revealed the following information:
Particulars Rs.
Opening Inventory 4,50,000
Purchases during the year 2013-14 37,00,000
Wages 2,25,000
Selling and Distribution Expenses 25,000
Carriage Outwards 5,500
Freight inwards 4,500
Sales during the year 2013-14 46,00,000
Return Inwards 25,000
Return Outwards 5,000

 

On March 31, 2014, the value of inventory as per physical stock-taking was Rs. 8,95,500.  The Company’s gross profit on sales has remained constant at 25%.  The management of the company suspects that some inventory might have been pilfered by some employees.  What is the estimated cost of missing inventory?

 

  1. Jaideep Cotton Mills purchased machinery on 1st August, 2011 for Rs. 90,000. On October, 2012 it purchased another machine for Rs. 40,000.

On 30th June, 2013 it sold off the first machine purchased in 2009 for Rs. 58,000 and on the same date purchased a new machinery for Rs. 1,00,000.  Depreciation is provided at 20% p.a. on the original cost each year.  Accounts are closed each year on 31st March.

Show the Machinery Account for three years.

  1. Pass necessary adjusting entries in Shri Ram Bhrose’s Journal on 31st March, 2003.
  2. The stock on 31st March, 2003 of raw materials was of the value of Rs.4,00,000 and that of finished goods of Rs.3,50,000;
  3. 30,000 for wages and Rs.10,000 for printing were outstanding;
  4. 12,000 for insurance (personal) and Rs.20,000 for income tax were paid in advance;
  5. Write off depreciation on machinery Rs.80,000 and the building Rs.30,000;
  6. 25,000 were received in advance for commission;
  7. 1,000 is interest accrued on investment;

Before making the above adjustments his net profit for the year ended 31st March, 2003 was Rs.2,15,000, what will be net profit for the year after making the adjustments ?

 

  1. The balance sheet for the 1st four days and the corresponding transactions are given below.  Identify the mistakes in the balance sheet and prepare balance sheet on the 5th  Assume that the business is dealing in real estate and correct the balance sheet based on each day transaction is it is required.
Liabilities Day 1 Day 2 Day 3 Day 4 Assets Day 1 Day 2 Day 3 Day 4
Capital 20,000 20,000 20,000 20,000 Bank 25,000 25,000 27,700 27,200
Loan 10,000 10,000 10,000 10,000 Stock NIL 5,000 3,000 1,800
Creditors NIL 5,000 5,000 5,000 B/R NIL NIL NIL 2,600
P & L a/c NIL NIL 700 1,600 Cash 5,000 5,000 5,000 5,000
  30,000 35,000 35,700 36,600   30,000 35,000 35,700 36,600

Day 1 : Owner contributed Rs. 20,000 and borrowed Rs. 10,000.  He retained balance of cash of Rs. 5,000 and the remaining are deposited into a bank account on the same date.

Day 2: the store purchased and received merchandise for stock for Rs. 10,000, agreeing to pay within 30 days.

Day 3: Stock costing Rs. 1,500 was sold for Rs. 2,200 which was received in cash.

Day 4: Stock costing Rs. 1,700 was sold for Rs. 2,400, the customers agreeing to pay Rs. 2,400 within 30 days.

Day 5: cash paid to creditors Rs. 10,000

 

SECTION – C

  • Answer any THREE questions. Each carries 15 marks.                    (3×15=60)

 

  1. The following are the particulars relating to hire purchase:
  2. Purchaser: Vivek & Co.
  3. Seller: Ravi & Co.
  4. Date of Purchase: Jan, 1st
  5. Asset Purchased: Vehicle.
  6. Cash Price: Rs. 10,31,520.
  7. Payments : Rs. 1,60,000 on signing of the agreement and the balance in the three equal annual instalments of Rs. 3,20,000 due on 31st December each year.
  8. Rate of Interest: 5% per annum.
  9. Depreciation: 20% on the written down value each year.

 

You are required to:

  1. Pass Journal Entries for year 2011 and 2012 in the books of Vivek & Co. under Outright Property Method.
  2. Also prepare Vehicle A/c, Ravi & Co. A/c and Depreciation for the first three years under Outright Property Method.

 

  1. From the following details, prepare a stores ledger under:
  2. a) FIFO Method and            b) Weighted Method  for Material ‘M’.

 

Date Particulars Quantity in Nos. Rate per unit (Rs.)
1.4.2014 Opening balance 5,500 30
3.4.2014 Purchases 1,000 32
5.4.2014 Issues 4,000 ?
10.4.2014 Purchases 3,800 34
14.4.2014 Issues 2,600 ?
16.4.2014 Purchases 2,500 36
28.4.2014 Issues 3,000 ?

 

On physical verification, it was found that there is a shortage of 50 units on 22nd April 2014.  Assume this shortage as Normal and find the Closing Stock under the two methods mentioned above.

 

  1. The following balances were extracted from the books of M/s Rajan as on 31st March, 2014.
Debit Balances Rs. Credit Balances Rs.
Cash 5,000 Creditors 7,500
Debtors 8,000 Bank Overdraft 5,250
Stock (01.04.2013) 22,600 Capital 25,000
Furniture 5,000 Sales 1,01,000
Drawings 575 Provision for bad debts 900
Motor Car 3,000 Bills Payable 1,500
Purchases 72,800 Outstanding Wages 2,185
Wages 7,500 Returns 430
Returns 350 Unearned Rent 500
Salaries 1,600    
Stationery & Printing 465    
Bad debts 300    
Bills Receivable 2,000    
Rent 1,800    
Loan at 3% to Subhash on  (1-12-2013) 5,000    
Investments (Short term) 7,900    
Prepaid Insurance 375    
TOTAL 1,44,265 TOTAL 1,44,265

Adjustments:

  1. Depreciation on furniture is to be charged at 10%.
  2. Goods of the value of Rs. 800 were withdrawn by the proprietor for his personal use.
  3. Bills Receivables include a dishonoured bill for Rs. 260.
  4. Sundry Debtors include an item of Rs. 300 due from a customer who has become insolvent.
  5. Provision for Doubtful Debts is to be maintained at 5% on Debtors.
  6. Outstanding Salaries is Rs. 400.
  7. Stock on 31st March 2014 was Rs. 12,000.

From the above information you are required to prepare Trading and Profit and Loss Account for the year ended 31st March, 2014 and the Balance Sheet as on that date.

 

  1. X owns the following assets as on 1.4.2013:
Assets Rates of Depreciation WDV as on 1.4.2013 (Rs.)
Building A 10% 63,000
Building B 10% 99,000
Building C 5% 1,98,000
Building D 10% 54,000
Machinery P 15% 27,000
Machinery Q 15% 36,000
Machinery R 30% 63,000
Car X 15% 1,35,000

The following assets are acquired during the Previous Year 2013-14:

Assets Rates of Depreciation Cost of Acquisition (Rs.) Date of Acquisition
Car Y 15% 2,25,000 15.05.2013
Machinery S 15% 18,000 14.08.2013
Machinery T 30% 54,000 10.09.2013
Patents 25% 72,000 01.01.2014
Know-how 25% 54,000 15.03.2014

The following assets have been sold during the Previous Year 2013 -14:

Assets Sale Consideration (Rs.)
Building B 1,08,000
Machinery P 9,000

The assets acquired during the year were put to use the day they were acquired.  You are required to compute the depreciation allowable to X as per in the Income Tax Act for the Previous Year 2013-14.

  1. Prepare Balance Sheet at the end of each and every transaction.
  2. Ramu started business with Cash Rs. 3,50,000; Stock Rs. 1,80,000; and Land & Building Rs.9,00,000.
  3. He purchased Furniture for Rs. 1,50,000.
  4. He purchased goods worth Rs. 3,00,000 from X.
  5. He sold goods costing Rs. 80,000 for Rs. 1,00,000.
  6. He sold goods costing Rs. 50,000 for Rs. 80,000 to Y.
  7. He opened a bank account and deposited Rs. 10,000 into the bank.
  8. Ram withdrew Rs. 50,000 for his personal use from office cash.
  9. Received an order for the supply of goods worth Rs. 1,00,000.

 

SECTION – D

  1. Compulsory question.                                                          (1×15=15)
  2. Deepa is a B.Sc., graduate. Unfortunately her father, who owned a Proprietary Concern, passed away on 17th September, 2014.  She is the only legal heir to her father’s estate.  She does not have any knowledge in Accountancy.  She has with her the following three Balance Sheets of her father’s concern.

She has a number of queries which are given at the end of the Balance Sheets.  You are asked to answer them.

Balance Sheet as on 15th September, 2014 Evening

Liabilities Amount (Rs.) Assets Amount (Rs.)
Capital 2,70,000 Land and Building 1,71,000
Creditors 30,000 Debtors 79,200
Profit 93,900 Cash 34,500
    Stock 1,09,200
Total 3,93,900 Total 3,93,900

Balance Sheet as on 16th September, 2014 Evening

Liabilities Amount (Rs.) Assets Amount (Rs.)
Capital 3,30,000 Land and Building 1,71,000
Creditors 30,000 Debtors 79,200
Profit 93,900 Cash 4,500
Divya & Co (Crs. For furniture) 60,000 Furniture 90,000
    Bank 60,000
    Stock 1,09,200
Total 5,13,900 Total 5,13,900

 

Balance Sheet as on 17th September, 2014 Evening

Liabilities Amount (Rs.) Assets Amount (Rs.)
Capital 3,30,000 Land and Building 1,71,000
Creditors 30,000 Debtors 60,000
Profit 92,700 Cash 4,500
Divya & Co (Crs. For furniture) 60,000 Furniture 90,000
    Bank 78,000
    Stock 1,09,200
Total 5,12,700 Total 5,12,700

Queries:

  1. She wants to know the transactions that took place on 16th and 17th of September, 2014.    ( 6 Marks)
  2. She is planning to buy a machinery worth Rs. 5,00,000 at the beginning of next accounting year. It is given that depreciation is to be charged at 10% p.a. on written down value method.  She wants to know the amount of depreciation she could charge to Profit and Loss Account for the first three years.      ( 3 Marks)
  3. She is planning to buy a Computer on Hire Purchase System for her father’s concern. She has to make a down payment of Rs. 8,000 and Rs. 10,000 at the end of 1st, 2nd and 3rd  The rate of interest is 5% p.a.  Given the present value of annuity of Re. 1 at 5% for one, two and three years respectively as 0.9524 ; 0.9070 and 0.8639, she wants to know the Cash Price of the Computer to be accounted in books.    (3 Marks)
  4. On 20th September, 2014, Mrs. Deepa herself passed the following entries as her accountant was absent on that day. She wants you to check the entries passed by her and pass the rectification entries, if you find them wrong.
  • Appointed a new employee at a monthly salary of Rs. 10,000 payable at the end of every month
Salary A/c                                                                Dr 10,000  
         To  Cash   10,000
  • Paid wages for the installation of New Machinery purchased Rs. 3,500.
Wages A/c                                                                Dr 3,500  
         To  Cash   3,500
  • Cash Deposited into Bank Rs. 20,000.
Cash  A/c                                                                Dr 20,000  
         To  Bank   20,000

                                                                                                                            ( 3 Marks)

 

St. Joseph’s College of Commerce B.Com. 2015 Financial Accounting Question Paper PDF Download

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ST. JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)
END SEMESTER EXAMINATION – SEPT/OCT. 2015
B.COM. (T.T.) – I SEMESTER
C2 15 MC 101: FINANCIAL ACCOUNTING
Duration: 3 Hours                                                                                             Max. Marks: 100
SECTION – A
I) Answer ALL the questions.  Each carries 2 marks.                                         (10×2=20)
  1. Mention any FOUR types of errors in accounting.
  2. What is a Suspense Account?  Why is it prepared?
  3. Why do we prepare Trading Account?  What type of expenses and incomes do we consider in its preparation?
  4. Resignation of an efficient employee is not accounted in the books of account.  Why?  Which accounting principle is followed here?
  5. Mention any FOUR Accounting Conventions.
  6. Ram commenced business with:

Cash Rs. 2,000 Machinery Rs. 19,000
Stock Rs. 25,000 Creditors Rs. 5,000

You are required to pass the Opening Journal Entry.
  7. Under what heading and sub-heading do we classify the following items:

a Goodwill b Term Loan
c Computers d 10% Preference Shares
  8. Determine the Gross Profit from the following:

Cost of goods sold Rs. 12,00,000
Gross Sales Rs. 15,85,000
Return inwards Rs. 3,000
Return outwards Rs. 2,000
  9. In which subsidiary books do you record the following transactions:

a Purchase of goods on credit b Provision for Depreciation
c Purchase of Plant on credit d Bills Receivable discounted with the bank.
  10. What Journal Entry do you pass for goods lost by fire worth Rs. 10,000?
 

SECTION – B
II) Answer any FOUR questions.  Each carries 5 marks.                                      (4×5=20)
  11. X Ltd. earned a profit of Rs. 28,00,000 for the year ending 31st March, 2015 after making provision for depreciation and taxation.  Rs. 12,80,000 profit was brought forward from last year to this year.  Following recommendations were made by the directors of the company to appropriate this profit:

a.      To transfer to General Reserve Rs. 8,40,000.

b.      To propose dividend at 12% on the Equity shares.

c.       To transfer Rs. 60,000 to Development Rebate Reserve.

d.     To transfer Rs. 2,00,000 to Capital Redemption Reserve.

e.      To transfer Rs. 60,000 to dividend equalization reserve.

f.        To transfer Rs. 50,000 to debenture redemption fund account

g.      Provide for Corporate Dividend Tax at 20.358%

Company’s capital consisted of 2,00,000 equity shares of Rs. 10 each fully paid.  Prepare Profit and Loss Appropriation Statement for the year ended 31st March, 2015.

 
  12. Pass Rectification Entries for the following transactions:

a Sale of goods worth Rs. 10,000 wrongly passed through Purchases book.
b Salary paid to Mohan Rs. 30,000 was debited to Mohan’s personal Account.
c Installation charges Rs. 3,500 paid for the installation of Machinery is debited to General Expenses Account.
d Goods worth Rs. 5,000 withdrawn by the proprietor for personal use have not been recorded in the books.
e Commission Received Rs. 2,000 is wrongly credited to Sales Account.
  13. The following is the Trial Balance prepared by an in-experienced person.  You are required re-draft it correctly.

Heads of Accounts Debit (Rs.) Credit (Rs.)
Salary paid   25,000
Printing and Stationery 3,500  
Plant 1,00,000  
Furniture   50,000
Debtors   1,50,000
Creditors   80,000
Return inwards 2,000  
Return outwards 3,000  
Carriage inwards   5,500
Carriage outwards   7,000
Drawings 1,000  
Capital 2,77,200  
Opening Stock 2,500  
Wages   1,500
Depreciation 300  
Goodwill   5,000
Advertisement   6,000
Sundry Expenses 900  
Suspense Account   60,400
Total 3,90,400 3,90,400
   

14.

  

Prepare Ram’s Account from the following details.  Balance the account and explain what it means.

Date Particulars Rs.
2015    
Sep. 1 Opening balance (Dr.) 8,600
Sep. 12 Sold goods to him 40,000
Sep. 14 Goods returned by him 1,000
Sep. 16 Received cash from him 10,000
Sep. 20 Received a cheque from him 15,000
Sep. 20 Discount allowed to him 300
  15. Prepare a Trading Account from the following particulars for the year ended 31st March., 2015.

Particulars Amount Particulars Amount
Opening Stock 25,000 Purchases Returns 2,200
Purchases 70,000 Sales Returns 3,600
Sales 1,80,000 Custom Duty 1,500
Wages 20,600 Gas, Fuel and Power 6,000
Carriage Inwards 3,400 Dock Charges 800
Carriage Outwards 2,000 Factory Lighting 9,600
Manufacturing Expenses 24,800 Office Lighting 500

Closing Stock is valued at Rs. 60,000.
  16. Explain briefly the Business Entity Concept and Going Concern Concept.
SECTION – C
III) Answer any THREE questions.  Each carries 15 marks.                                (3×15=45)                                                                                                
  17. Prepare the Daily Balance Sheet for the following transactions:

a)      Manoj started business with Cash Rs. 2,80,000; Goods costing Rs. 1,50,000; Building Rs. 2,50,000; Creditors – Krish Rs. 50,000.

b)     He purchased goods for cash Rs. 50,000

c)      He sold goods costing Rs. 20,000 for Rs. 35,000 for Cash.

d)     He purchased goods from Rahul Rs. 55,000

e)      He sold goods to Varun (costing Rs. 52,000) for Rs. 60,000

f)       He paid cash to Rahul in full settlement Rs. 53,000

g)     Received cash from Varun in full settlement Rs. 59,000

h)     Rent outstanding Rs. 3,000

i)       Prepaid insurance Rs. 2,000

j)        Commission received by him Rs. 13,000

 
  18. From the following Trial Balance of M/S Akshay & Co., prepare Trading and Profit and Loss Account for the year ended 31st March 2015 and Balance Sheet as on that date:

Particulars Debit (Rs.) Credit (Rs.)
Purchases and Sales 2,75,000 5,20,000
Returns Inwards 15,000  
Returns Outwards   9,000
Carriage Inwards 12,400  
Wages and salaries 58,600  
Trade expenses 2,200  
Rent   13,000
Insurance 2,000  
Audit fees 1,200  
Debtors and creditors 1,10,000 62,100
B/R and B/P 3,300 2,200
Printing and advertising 5,500  
Commission   1,000
Opening stock 36,000  
Cash in hand 12,800  
Cash at bank 26,800  
Bank loan   20,000
Interest on loan 1,500  
Capital   2,50,000
Drawing 15,000  
Fixed assets 3,00,000  
     
Total 8,77,300 8,77,300

Adjustments:

a)      Stock at Cost Price is Rs. 60,000 and at Market Price is Rs. 50,000.

b)     Depreciate Fixed Assets by 10%.
  19. Enter the following transactions in a Three Column Cash Book.

2015   Rs.
June 1 Commenced business with cash 1,00,000
June 2 Opened a current account in Central Bank and deposited 80,000
June 3 Further capital introduced Rs. 50,000, out of which Rs. 40,000 deposited into the bank.  
June 3 Purchased goods from Gopal on credit. 50,000
June 4 Paid to Gopal by cheque 36,000
  Discount received 500
June 6 Received a cheque from Sudesh and deposited into bank on 7th June. 12,500
June 8 Sold goods to Ram on credit 7,500
June 10 Received cheque from Ram in full settlement of his account. The cheque was banked the same day. 7,230
June 11 Commission paid to agent. 650
June 15 Office furniture purchased in cash from Modern Furniture House. 12,000
June 18 Drew cheque for personal use. 2,000
June 19 Withdrew cash for personal use 1,000
June 30 Paid salary by cheque. 8,000
   

20.

  

Pass Journal Entries for the following transactions in the books of Mr. Abhay.

2015  
Sep. 1 Abhay started business with Cash Rs. 80,000; Goods Rs. 40,000 and Furniture Rs. 20,000.
Sep. 2 Sold goods to Nandlal of the list price of Rs. 20,000 at trade discount of 10%.
Sep. 4 Nandlal returned goods of the list price of Rs. 4,000.
Sep. 8 Received from Nandlal Rs. 14,150 in full settlement of his account.
Sep. 10 Purchased goods from Brijesh of the list price of Rs. 10,000 at 15% trade discount.
Sep. 13 Returned goods to Brijesh of the list price of Rs. 1,000.
Sep. 16 Settled the account of Brijesh by paying cash under a discount of 4%.
Sep. 18 Purchased goods from Anil Rs. 5,000 and Sunil Rs. 10,000.
Sep. 19 Paid cash to Anil Rs. 1,900 and discount received Rs. 100.
Sep. 20 Paid Rs. 9,800 to Sunil in full settlement of his account.
Sep. 20 Bought a table fan for Rs. 1,200 for the domestic use of Abhay.
Sep. 25 Sold goods for cash of the list price of Rs. 8,000 at 10% trade discount and 3% cash discount.
Sep. 29 Goods lost by fire Rs. 2,000.
Sep. 30 Paid Rent Rs. 800; Trade Expenses Rs. 700 and Travelling Expenses Rs. 380.
   

21.

  

a)  Write the Format of Statement of Profit and Loss as per Schedule III of the Companies Act, 2013.                                                                                (10 Marks)

 

b)  Write a brief note on Accounting concepts.                                      (5 Marks)

 
SECTION – D
IV) Case Study                                                                                                              (1×15=15)                                                                                           
  22. a)      Mr. Balu, the new accountant of Vishnu and Co. Ltd. has prepared the following Balance Sheet.

 

 

 

 

Vishnu and Co. Ltd.

Balance Sheet as at 31.03.2015

Liabilities Amount Assets Amount
80,000 Equity Share Capital of Rs. 10 each 8,00,000 Goodwill 50,000
General Reserve 50,000 Building 6,00,000
Profit and Loss A/c 75,000 Furniture 14,400
6% Debentures 6,00,000 Plant and Machinery 5,94,000
Term Loans 2,28,000 Investments 95,000
Bills payable 76,000 Stock 1,10,000
Sundry Creditors 1,00,000 Debtors 1,65,300
Provision for tax 10,000 Cash in hand 15,500
    Cash at Bank 2,79,800
    Bills Receivables 15,000
Total 19,39,000 Total 19,39,000

 

The Director of the Co., is of the view that the Balance Sheet is not as per the requirements of the Company Act.

You are required to redraft the Balance Sheet as per Schedule III of the Companies Act, 2013.                                                                         (12 Marks)

 

b)     Explain Money Measurement Concept.                                 (3 Marks)

 

 

 

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St. Joseph’s College of Commerce 2015 Financial Accounting Question Paper PDF Download

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ST. JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)
END SEMESTER EXAMINATION – SEPT/OCT. 2015
B.COM.(Regular) –  I SEMESTER
C1 15MC101: FINANCIAL ACCOUNTING
Duration: 3 Hours                                                                                             Max. Marks: 100
SECTION – A
I) Answer ALL the questions.  Each carries 2 marks.                                        (10×2=20)
  1. What is a Trial Balance?  What does it indicate?
  2. What is Business Entity Concept?
  3. What is Error of Principle?  Give an example.
  4. Mention any four methods of charging depreciation.
  5. Mention the three fundamental accounting assumptions?
  6. X Ltd., a dealer in second hand cars has the following five vehicles of different models and makes in their stock at the end of the financial year 2014-15:

Car Fiat Ambassdor Maruthi Esteem Maruthi 800 Zen
Cost (Rs.) 90,000 1,35,000 2,75,000 1,26,000 2,10,000
Net Realizable Value (Rs.) 1,05,000 1,55,000 2,65,000 1,25,000 2,08,000

Find the value of stock included in the balance sheet of the company as on 31st March 2015.
  7. In the year 2014-15, C Ltd. purchased a new machinery and made the following payments in relation to it:

Particulars Rs. Rs.
Cost as per supplier’s list 5,20,000  
Less: Agreed discount 20,000 5,00,000
Delivery charges   15,000
Erection Charges   25,000
Annual Maintenance Charges   5,000

Determine the cost of the machine to be debited to Machinery Account.
  8. Wages paid for the installation of Machinery Rs. 1,500 is debited to wages account.  Pass the rectification entry.
  9. Purchased goods worth Rs. 1,00,000 at a trade discount of 20% and a Cash discount of 5% from Mr. Anesh Shetty.  40% payment is made immediately.  Journalize the transaction.
  10. If original cost of the asset is Rs. 18,80,000; its scrap value is Rs. 50,000 and its estimated useful life is 15 years, then what is the annual depreciation under straight line method?
SECTION – B
II) Answer any FOUR questions.  Each carries 5 marks.                                      (4×5=20)
  11. Mention the differences between Tangible and Intangible Fixed Assets.
  12. Rectify the following errors:

a Goods for Rs. 8,000 were purchased from Modern Traders on credit, but no entry has yet been passed.
b Machinery purchased for Rs. 10,000 was wrongly passed through purchase book.
c Cash paid to Ram Rs. 400 was debited to the account of Shyam.
d Goods sold to Ajay for Rs. 2,600 were recorded in Purchases Book by mistake.
e Sale of old chairs and tables for Rs. 8,000 were treated as sale of goods.
  13. Under what headings and sub-headings will you show the following items in the Balance Sheet of the Company?

1.      Patents 2.      Computers
3.      Unclaimed Dividend 4.      Prepaid Expenses
5.      Securities Premium 6.      Computer Software
7.      Loose Tools 8.      Capital Reserve
  1. Provision for tax
  1. Debit balance in the statement of Profit and Loss
  14. State whether the following transactions are capital expenditure, deferred revenue expenditure or revenue expenditure.  Give reasons:

a A sum of Rs. 40,000 was spent in overhauling its entire plant which resulted in adding five years to its working life.
b Rs.2,00,000 were spent on advertising in connection with the introduction of a new product in the market.
c Rs. 5,200 spent on repairs and maintenance of an old car.
d A sum of Rs. 4,000 was spent on white-washing and painting the new factory.
e Carriage paid on goods purchased.
  15. Consider the following information pertaining to G & Sons as on March 31st 2015.

Particulars Rs.
Opening Inventory 15,00,000
Purchases during the year 2014-15 45,00,000
Wages 1,55,000
Carriage Inwards 25,000
Carriage Outwards 12,500
Other Direct Expenses 3,500
Sales during the year 2014-15 50,00,000

As per physical inventory taken on March 31st, 2015 the closing inventory was Rs. 18,90,000.  Gross Profit on Cost has remained constant at 25%.  The management of the firm suspects that some inventory might have been taken away by a new employee.  Estimate cost of missing inventory on the close of the financial year and the cost of goods sold during the year.
  16. Abhilash Ltd. earned a profit of Rs. 38,00,000 for the year ending 31st March, 2015.  Rs. 13,80,000 profit was brought forward from last year to this year.  Following recommendations were made by the directors of the company to appropriate this profit:

a.      To pay Rs. 1,80,000 as bonus to employees of the company.

b.      To transfer to General Reserve Rs. 9,40,000.

c.       To propose dividend at 15% on the Equity shares.

d.     To transfer Rs. 25,000 to Staff Gratuity Fund.

e.      To transfer Rs. 70,000 to Development Rebate Reserve.

f.        To transfer Rs. 2,20,000 to Capital Redemption Reserve.

g.      To transfer Rs. 80,000 to dividend equalization reserve.

h.      To transfer Rs. 70,000 to debenture redemption fund account

i.        Transfer Rs. 50,000 from exempt profit reserve account to profit and loss appropriation account.

j.        Provide for Corporate Dividend Tax at 20.358%.

Company’s Capital consisted of 2,00,000 Equity Shares of Rs. 10 each fully called up (Calls in arrears Rs. 20,000).  Prepare Profit and Loss Appropriation Statement for the year ended 31st March, 2015.

 
SECTION – C
III) Answer any THREE questions.  Each carries 15 marks.                                (3×15=45)                                                                                                
  17. Prepare Trading and Profit & Loss A/c for the year ending 31.03.2015  and the Balance Sheet  as on 31.03.2015 from the Trial Balance taking into consideration the adjustment given below:

Particulars Debit Particulars Credit
Op. stock       1,50,000 Op. Provision for Doubtful Debts           3,970
Advertisement         30,000 Returns Outwards           3,800
Building       2,00,000 Commission Received         12,000
Machinery       1,50,000 Interest Received           1,200
Debtors       1,20,000 Sales    21,00,500
Cash         12,500 Creditors       1,22,850
Bank         23,800 Bank Loan         15,500
Wages         22,000 Capital       2,60,000
Purchases    15,00,000    
Freight Inwards           3,450    
Freight Outwards           4,500    
Bad Debts           2,580    
Returns Inwards         12,000    
Bank Charges              500    
Land       2,60,000    
Drawings         28,490    
Total    25,19,820 Total    25,19,820

 

 

Adjustments:

1 Closing Stock at Cost is Rs. 1,50,000 and at Net Realizable Value is Rs. 1,45,000.
2  Interest due but not received Rs. 300.
3  Depreciate Building and Machinery at 10% p.a.
4  Further Bad debts is Rs. 1,500.  Make a provision for doubtful debts at 3%.
5 Goods withdrawn by proprietor Rs. 10,000 for his personal use.
6  1/3 of the Advertisement expenses should be charged to P & L A/c.
  18. From the following details, prepare a stores ledger under:

a) FIFO Method            and            b) Weighted Average Method

Date Particulars Quantity in Nos. Rate per unit (Rs.)
01.04.2015 Opening balance 500 150
03.04.2015 Purchases 100 160
05.04.2015 Issues 400 ?
10.04.2015 Purchases 380 170
14.04.2015 Issues 260 ?
16.04.2015 Purchases 250 180
28.04.2015 Issues 300 ?

On physical verification, it was found that there is a shortage of 8 units on 22nd April 2015.  Assume this shortage as Normal. 

  19. Prepare Balance Sheet at the end of each and every transaction.

a Ram started business with Cash Rs. 2,50,000; Stock Rs. 5,00,000;  Land & Building Rs. 4,00,000 and Creditors Rs. 2,50,000.
b He sold goods costing Rs. 60,000 for Rs. 80,000.
c He sold goods costing Rs. 1,00,000 for Rs. 1,25,000 to Y
d Ram withdrew Rs. 5,000 for his personal use from office cash.
e Sold goods worth Rs. 1,00,000 at a loss of Rs. 10,000 for cash.
f Opened a bank account and deposited Rs. 50,000.
g Received Commission Rs. 10,000.
h Purchased goods worth Rs. 1,00,000 on credit from Ravi at a Trade Discount of 15% and cash discount of 3%.  60% payment made immediately in cash.
i Paid salary Rs. 10,000 and Rs. 5,000 wages for the month.
j Received an order for the supply of goods worth Rs. 10,000.
  20. From the following figures of X Co. Ltd., prepare a statement of Profit and Loss for the year ending 31st March, 2015 as required by the Companies Act, 2013.

Particulars Amount Particulars Amount
Salaries 2,25,000 Sales 33,17,000
Rent 72,000 Sales Returns 17,000
Telephone Charges 43,900 Discount allowed 3,000
Printing and Stationery 4,500 Profit on sale of Furniture 3,450
Freight outwards 22,980 Loss on sale of Machinery 2,450
Promotion Expenses 25,500 Sale of old newspapers 980
Depreciation on Machinery 2,800 Interest on Debenture 30,000
Goodwill written off 2,000 Discount Received 2,300
Purchases 25,87,000 General Expenses 3,900
Purchases returns 2,000 Other Incomes 900
Stock on 1.4.2014 45,000    

Additional Information:

a.      Inventory on 31.3.2015 is Rs. 55,000 (Net realizable value being Rs.53,000).

b.      Unused stationery is worth Rs. 1,500.

c.       Outstanding Salary is Rs. 2,000.

d.     Rent prepaid is Rs. 3,000.

e.      Provide Rs. 60,000 for current tax.

f.        No. of Equity Shares of the Company since 1.4.2014 is 50,000.
  21. A Company purchased two machines for Rs. 20,00,000 on 1st January, 2011.  It purchased one more machine for Rs. 6,00,000 on 1st March, 2012.  It sold one machine on 1st July, 2013 for Rs. 7,50,000 which was purchased on 1st January, 2011 for Rs. 12,00,000 and on the same day purchased one more machine from the sale proceeds.  On 30th June 2014, the second machinery bought on 1st January 2011 for Rs. 8,00,000 was auctioned at 40% of the book value on that date.

Depreciation was charged at 10% p.a. by diminishing balance method.

Prepare Machinery Account up to the year 31st December, 2014.

 

Note:  Accounts are closed on 31st December every year.

 
SECTION – D
IV) Case Study                                                                                                              (1×15=15)                                                                                           
  22. a)      Mr. Abijay, a recently qualified B.Com. Graduate, has come for a job opportunity at Alila Co. Ltd.  The manager of the Co., gave him the following list of transactions and asked him to Pass Journal Entries.  Mr. Abijay is unable to pass the entries and hence seeks your help.  You are requested to pass the Journal Entries on his behalf.

i)                   Bought goods from Ram for Rs. 12,00,000 at a trade discount of 10% and cash discount of 2%.  Paid 80% amount immediately.

ii)                 Alila Co. Ltd is a dealer in Computers.  It purchased 3 computers worth Rs. 38,000 each for its own use and 10 computers worth Rs. 55,000 for the purpose of sale from Arvind Computec Ltd.

iii)              Mahesh who owed us Rs. 10,000 was declared insolvent and only 40 paise in a rupee is recovered from him in full settlement of his account.

iv)               Purchased goods for Rs. 20,000 from X and supplied it to Y for Rs. 26,000.  Y returned goods worth Rs. 7,800 which in turn were returned to X.

v)                 Paid Salary Rs. 25,000; out of which Rs. 5,000 is prepaid.

vi)               Wages paid Rs. 18,000 and wages outstanding Rs. 2,000.

vii)             Received an order for the supply of goods worth Rs. 15,000.

(10 Marks)

b)     Balance Sheet as at 18th September, 2015.

Liabilities Amount Assets Amount
Capital 12,00,000 Land and Building 10,00,000
Bank Loan 5,00,000 Furniture 3,50,000
Creditors 1,25,000 Cash at bank 2,50,000
Bills Payable 25,000 Stock 2,50,000
  18,50,000   18,50,000

Balance Sheet as at 19th September, 2015.

Liabilities Amount Assets Amount
Capital 12,50,000 Land and Building 10,00,000
Bank Loan 5,00,000 Furniture 3,50,000
Creditors 1,25,000 Cash at bank 2,25,000
    Stock 50,000
    Debtors 2,50,000
  18,75,000   18,75,000

Required:

i)       You are to Analyze the above two Balance Sheets and mention the transactions that took place on 19th September, 2015.          (3 Marks)

ii)     Prepare the Balance Sheet as at the end of 20th September, 2015 if creditors were settled at a discount of 2,500 at the beginning of 20th September, 2015.

(2 Marks)

 

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St. Joseph’s College of Commerce B.Com. 2015 I Sem Financial Accounting Question Paper PDF Download

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ST. JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)
END SEMESTER EXAMINATION – SEPT/OCT. 2015
B.COM(Int. Fin & A/c)– I SEMESTER
C4 15MC101: FINANCIAL ACCOUNTING
Duration: 3 Hours                                                                                      Max. Marks: 100
SECTION – A
I) Answer ALL the questions.  Each carries 2 marks.                             (10×2=20)
  1. Sales revenue should be recognised when goods and services have been supplied; costs are incurred when goods and services have been received.

Which accounting concept governs the above? Explain.
  2. The net assets of Atlas, a trader, at 1 January 20X5 amounted to $128,000. During the year to 31 December 20X5 Atlas introduced a further $50,000 of capital and made drawings of $48,000. At 31 December 20X5 Atlas net assets totalled $184,000. What is Atlas total profit or loss for the year ended 31 December 20X5?
  3. A company’s motor vehicles at cost account at 30 June 20X6 is as follows:

MOTOR VEHICLES – COST

Particulars $

 

 Particulars $
Balance b/d 150,500 Disposal 85,000

 
Additions 120,950 Balance c/d 186,450

 
  271,450   271,450

What opening balance should be included in the following period’s trial balance for motor vehicles – cost at 1 July 20X6? Why?
  4. Jones Company has the following transactions:

1) Payment of $400 to J Blog for a cash purchase.

2) Payment of $250 to J Doe in respect of an invoice for goods purchased last month. What are the correct ledger entries to record these transactions?
  5. You are given the following information:

Receivables at 1 January 20X5 $10,000

Receivables at 31 December 20X5 $9,000

Total receipts during 20X5 (including cash sales of $5,000) $85,000

What are sales on credit during 20X5?
  6. Ben has extracted the following list of balances from his general ledger at 31 October 20X5:

Sales $258,542; Opening inventory $9,649; Purchases $142,958; Expenses $34,835; Non-current assets (carrying amount) $63,960; Receivables $31,746; Payables $13,864; Cash at bank $1,783; Capital $12,525.

What is the total of the debit balances in Ben’s trial balance at 31 October 20X5?
  7. Distinguish between Carriage Inwards and Outwards and its treatment.
  8. In preparing its financial statements for the current year, a company’s closing inventory was understated by $300,000.What will be the effect of this error if it remains uncorrected?
  9. Your firm bought a machine for $5,000 on 1 January 20X1, which had an expected useful life of four years and an expected residual value of $1,000; the asset was to be depreciated on the straight-line basis. The firm’s policy is to charge depreciation in the year of disposal. On 31 December 20X3, the machine was sold for $1,600.What amount should be entered in the 20X3 statement of comprehensive income for profit or loss on disposal?
  10. What does IAS 1 and IAS 16 deal with?
SECTION – B
II) Answer any FOUR questions.  Each carries 5 marks.                              (4×5=20)
  11. (a) At 31 December 20X4 a company’s capital structure was as follows:

Ordinary share capital $125,000(500,000 shares of 25c each)

Share premium account 100,000

In the year ended 31 December 20X5 the company made a rights issue of 1 share for every 2 held at$1 per share and this was taken up in full. Later in the year the company made a bonus issue of 1share for every 5 held, using the share premium account for the purpose.

What was the company’s capital structure at 31 December 20X5?

(b) Explain the term Limited Liability Companies.                              (3+2)
  12. The closing inventory at cost of a company at 31 January 20X5 amounted to $284,700.

The following items were included at cost in the total:

a) 400 coats, which had cost $80 each and normally sold for $150 each. Owing to a defect in manufacture, they were all sold after the reporting date at 50% of their normal price. Selling expenses amounted to 5% of the proceeds.

b) 800 skirts, which had cost $20 each. These too were found to be defective. Remedial work in February 20X5 cost $5 per skirt, and selling expenses for the batch totalled $800. They were sold for $28 each.

What should the inventory value be according to IAS 2 Inventories after considering the above items?
  13. Yen Co. is a company which specialises in developing new materials and manufacturing processes for the furniture industry. The company receives payments from a variety of manufacturers, which pay for the right to use the company’s patented fabrics and processes.

Research and development cost for the year ended 30 September 20X5 can be analysed as follows:

Current project:

Project A                                                                                                  $280,000

New flame-proof padding. Expected to cost a total of $400,000 to complete development. Expected total revenue $2,000,000 once work completed – probably late 20X6. Customers already placed advance orders for the material after seeing demonstrations of its capabilities earlier in the year.

Explain how the research project A will be dealt with in Yen Co.’s statement of profit or loss and statement of financial position. Explain your proposed treatment in terms of IAS 38 Intangible assets.
  14. Give Journal entries to rectify the following errors:

a. $2000 paid for furniture purchased has been debited to Purchases account.

b. Goods of $300 taken by the proprietor have not been entered in the books at all.

c. A credit sale of goods to Ram for $2500 has been wrongly passed through the purchase book.

d. No entry has been made for purchases return of $200.

e. An amount of $1200 spent on annual white-washing was debited to building.
  15. (a)S & Co sell three products – A, B and C. The following information was available at the year end.

  Basic $ per unit Super $ per unit

 

 Luxury$ per unit

 
Original cost 10 9 20
Estimated selling price 9 12 26
Selling and distribution costs 1 4 5
Units of inventory 500 1,250 850

In accordance with IAS2 Inventories, what is the value of inventory at the year end?

 

(b)A car was purchased by a business in May 20X1 for:

Cost 10,000; Road fund licence 150; Total 10,150.

The business adopts a date of 31 December as its year end.

The car was traded in for a replacement vehicle in August 20X4 at an agreed value of $5,000.It has been depreciated at 25% per annum on the reducing-balance method, charging a full year’sdepreciation in the year of purchase and none in the year of sale.

What was the profit or loss on disposal of the vehicle during the year ended December 20X4?                                                                      (2.5 +2.5)
  16. Given that prudence is the main consideration, discuss under what circumstances, if any, revenue (IAS 18) might be recognised at the following stages of a sale:

a. Goods are acquired by the business which it confidently expects to resell very quickly.

b. A customer places with a firm order for the goods.

c. The goods are delivered to the customer.

d. The customer pays for the goods.

e. The customer’s cheque in payment for the goods is cleared by the bank.
 

SECTION – C
III) Answer any THREE questions.  Each carries 15 marks.                        (3×15=45)                                                                                                
  17. (a)What is the purpose of depreciation? In what circumstances is the reducing balance method more appropriate than the straight line method? Give reasons for your answer.

 

(b) Charles Company entered into the following transactions:

i) He sold goods on credit to Cody with a list price of $3,200. He allows a 10% trade discount anda further 2% discount for payment within seven days. Cody paid within two days.

ii) He made a credit sale to Mary allowing a 5% trade discount on the list price of $640.

iii) He purchased goods for $600 and paid $590, receiving a discount for immediate cash payment.

How much discount should be recorded in the Discount Allowed account as a result of the above transactions?

 

(c)Alice Company has issued 100,000 ordinary shares of $1 each and 40,000 7% preference shares of $2 each. Its profits after taxation for the year to 30 September 20X5 were $16,800. The management board has decided to pay an ordinary dividend (i.e. a dividend on ordinary shares) which is 50% of profits after tax and preference dividend.

Required:

Show the amount in total of dividends as appropriation of profit and of retained profits, and calculate the dividend per share on ordinary shares.

(  5+3+ 7 )
  18. A firm has the following transactions with its product S.

Year 1

Opening inventory: nil

Buys 20 units at $600 per unit

Buys 24 units at $500 per unit

Sells 16 units at $800 per unit

Buys 12 units at $400 per unit

Sells 24 units at $800 per unit

Year 2

Buys 20 units at $400 per unit

Sells 10 units at $800 per unit

Buys 24 units at $300 per unit

Sells 50 units at $800 per unit

Required

Using FIFO, calculate the following on an item by item basis for both year 1 and year 2.

(i) The closing inventory

(ii) The sales

(iii) The cost of sales

(iv) The gross profit
  19. The following is the Trial Balance of Harry as at 31st March, 20X5: (in $)

Harry’s Capital A/c 76,690 Bank Interest (Dr.) 1,100
Stock 1st April 20X4 46,800 Printing and Stationary Expenses 14,400
Sales 3,89,600 Bank Balance 8,000
Returns Inwards 8,600 Discount Earned 4,440
Purchases 3,21,700 Furniture & Fittings 5,000
Returns Outwards 5,800 Discount Allowed 1,800
Carriage Inwards 19,600 General Expenses 11,450
Rent & Taxes 4,700 Insurance 1,300
Salaries & Wages 9,300 Postage, Telegram Expenses 2,330
Sundry Debtors 24,000 Cash Balance 380
Sundry Creditors 14,800 Travelling Expenses 870
Bank Loan @ 14 % p.a. 20,000 Drawings 30,000

The following adjustments are to be made:

a. Included amongst the Debtors is $ 3,000 due from Rammy and included among the Creditor $ 1,000 due to him.

b. Provision for Doubtful Debts is created at 5% and Discount at 2% on Sundry Debtors.

c. Depreciation on Furniture and Fittings at 10% shall be written off.

d. Personal purchases of Harry amounting to $ 600 had been recorded in the Purchase Day Book.

e. Interest on Bank Loan shall be provided for the whole year.

f. A quarter of the amount of Printing & Stationary Expenses is to be carried forward to the next year.

g. Credit Purchase Invoice amounting to $ 400 had been omitted from the Books.

h. Stock on 31.3.2015 was $78,600

You are required to prepare the Trading and Profit & Loss A/c for the year ended 31.3.2015 and Balance Sheet as on 31.3.2015.
  20. (a) A business includes $220,000 worth of machinery at cost in its accounts. Its policy is to make a provision for depreciation at 20% per annum straight line. The total provision now stands at $140,000. The business sells for $38,000 a machine which it purchased exactly two years ago for $60,000. Show the relevant double entries as well as ledger entries.

(b)You are a dealer in Computers. The Balance sheet on the 1st day is as follows:

Liabilities Amount ($) Assets Amount ($)
Capital 4,000,000 Cash

Inventory

 3,400,000

600,000

On the second day computers purchased worth $400,000 for cash. On the third day plant purchased for cash $1,600,000. On the fourth day purchase of stationary for $100,000 for cash. On the Fifth day goods sold for cash $600,000 (cost $400,000). On the sixth day loan of $300,000 received from European Bank.

Answer the following questions:

i. Identify the first day transaction and pass journal entry ________________

ii. The balance sheet total on the asset side at the end of the second day is _____________.

iii. The balance sheet total of inventory at the beginning of third day is_____________.

iv. The balance sheet total on the asset side at the end of the 5th day is ______________.

v. The balance sheet cash position at the beginning of the 5th day is ________.

vi. The liability side total at the end of fifth day will be ______________.

vii. Profits earned during the first week are ____________.

viii. If debit side total is more than credit side total, it is a _____________.

                                                                                                                    (7+8)

 
  21. When Ivan commenced trading as a car hire dealer on 1 January 20X1, he purchased business premises at a cost of $100,000.

For the purpose of accounting for depreciation, he decided the following:

(a) The land part of the business premises was worth $40,000; this would not be depreciated.

(b) The building part of the business premises was worth the remaining $60,000. This would be depreciated by the straight line method to a nil residual value over 30 years.

After five years of trading, on 1 January 20X6 Ivan decides that his business premises are now worth $300,000, divided into:

$

Land                             150,000

Building                      150,000

300,000

He estimates that the building still has a further 25 years of useful life remaining.

Required:

(a) Calculate the annual charge for depreciation for the first five years of the building’s life and the statement of financial position value of the land and building as at the end of each of the first five years.

(b) Demonstrate the impact the revaluation will have on the depreciation charge and the statement of financial position value of the land and building.

(c) Show the Accounting Entries in the Ledger for the above Revaluation.
SECTION – D
IV) Case Study                                                                                                       (1×15=15)                                                                                           
  22. UPS, a limited liability company, has the following Trial balance at 31 December 20X5.

 

 

Particulars Debit $’000 Credit $’000
Cash at bank 100  
Inventory at 1 January 20X5 2,400  
Administrative expenses 2,206  
Distribution costs 650  
Non-current assets at cost:    
Buildings 10,000  
Plant and equipment 1,400  
Motor vehicles 320  
Suspense   1,500
Accumulated depreciation:    
Buildings   4,000
Plant and equipment   480
Motor vehicles   120
Retained earnings   560
Trade receivables 876  
Purchases 4,200  
Dividend paid 200  
Sales revenue   11,752
Sales Tax Payable   1,390
Trade Payables   1,050
Share Premium   500
$1 Ordinary shares   1000
TOTAL 22,352 22,352

The following additional information is relevant.(Amount in ‘000s)

(a) Inventory at 31 December 20X5 was valued at $1,600. While doing the inventory count, errors in the previous year’s inventory count were discovered. The inventory brought forward at thebeginning of the year should have been $2200, not $2400 as above.

(b) Depreciation is to be provided as follows:

(i) Buildings at 5% straight line, charged to administrative expenses.

(ii) Plant and equipment at 20% on the reducing balance basis, charged to cost of sales.

(iii) Motor vehicles at 25% on the reducing balance basis, charged to distribution costs.

(c) No final dividend is being proposed.

(d) A customer has gone bankrupt owing $76,000. This debt is not expected to be recovered and an adjustment should be made. An allowance for receivables of 5% is to be set up.

(e) 1 million new ordinary shares were issued at $1.50 on 1 December 20X5. The proceeds havebeen left in a suspense account.

Required:

Prepare the following:

(a) Statement of profit or loss for the year ended 31 December 20X5

(b) Statement of changes in equity for the year ended 31 December 20X5

(c) Statement of financial position as at 31 December 20X5

All statements are to be prepared in accordance with the requirements of International FinancialReporting Standards. Ignore taxation.              (3+4+8)

 

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