Download Test Paper - Advanced Accounting - Chartered Accountants - Group II - 2010 and more Study notes Advanced Accounting in PDF only on Docsity!
Roll No……… Total No. of Questions — 6] [Total No. of Printed Pages — 4 Time Allowed : 3 Hours Maximum Marks : 100
Answer all Questions Wherever appropriate, suitable assumption(s) should be made by the candidates. Working notes should form part of the answer
- Answer the following questions: 10x2= (i) A Company had issued 20,000, 13% Convertible debentures of Rs.100 each on 1st April, 2007. The debentures are due for redemption on 1 st^ July, 2009. The terms of issue of debentures provided that they were redeemable at a premium of 5% and also conferred option to the debentureholders to convert 20% of their holding into equity shares (Nominal value Rs.10) at a price of Rs.15 per share. Debentureholders holding 2,500 debentures did not exercise the option. Calculate the number of equity shares to be allotted to the Debentureholders exercising the option to the maximum. (ii) Santosh Ltd. has received a grant of Rs.8 crores from the Government for setting up a factory in a backward area. Out of this grant, the company distributed Rs.2 crores as dividend. Also, Santosh Ltd. received land free of cost from the State Government but it has not recorded it at all in the books as no money has been spent. In the light of AS 12 examine, whether the treatment of both the grants is correct. (iii) Rohini Limited has obtained loan from an Institution for Rs.500 lacs for modernization and renovation of its plant and machinery. The installation of plant and machinery was completed on 31.3.2009 amounting to Rs.320 lacs and Rs.50 lacs was advanced to suppliers of additional assets and the balance of Rs.130 lacs has been utilized for working capital requirements. Total interest paid for the above loan amounted to Rs.65 lacs during 2008-09. You are required to state how the interest on institutional loan is to be accounted for in the year 2008-09. (iv) A Company follows April to March as its financial year. The Company recognizes cheques dated 31 stMarch or before, received from customers after balance sheet date, but before approval of financial statement by debiting ‘Cheques in hand account’ and crediting ‘Debtors account’. The ‘cheques in hand’ is shown in the Balance Sheet as an item of cash and cash equivalents. All cheques in hand are presented to bank in the month of April and are also realised in the same month in normal course after deposit in the bank. State with reasons, whether the collection of cheques bearing date 31 st^ March or before, but received after Balance Sheet date is an adjusting event and how this fact is to be disclosed by the company? (v) What is Piecemeal payments method under Partnership Dissolution? Briefly explain the two methods followed for determining the order in which the payments are made? (vi) Briefly explain “Reserve for Unexpired Risks” under General Insurance Business. What are the percentages of such reserve to be created under IRDA Act for various General Insurance businesses? (vii) On 31 st^ March, 2010, the following ledger balances have been extracted from the books of Washington branch office: Ledger Accounts $
Building Stock as on 1.4. Cash and Bank Balances Purchases Sales Commission receipts Debtors Creditors
You are required to convert above Ledger balances into Indian Rupees. Use the following rates of exchange:
Rs. per $ Opening rate Closing rate Average rate For fixed assets
(viii) Mention the condition when a cash credit overdraft account is treated as ‘out of order’. (ix) From the following information, calculate the amount of sundry debtors as on 31.3.2010: Balance as on 1.4.2009 is Rs.50,000. Bad debts are 2% and discount to the customers is given @ 1% of the opening balance of sundry debtors. Returns from the customers are Rs.3,000. Cash received from debtors is Rs.2,30,000. Cash received from debtors in transit is Rs.14,000. Cash sales are Rs.5,00,000. Credit sales are Rs.2,50,000. (x) Closing stock for the year ending on 31.3.2010 is Rs.50,000 which includes stock damageed in a fire in 2008–09. On 31.3.2009, the estimated net realisable value of the damageed stock was Rs.12,000. The revised estimate of net realisable value of damageed goods amounting Rs.4,000 has been included in closing stock of Rs.50,000 as on 31.3.2010. Find the value of closing stock to be shown in Profit and Loss account for the year 2009–10.
- P and Q are partners of P & Co. sharing Profit and Losses in the ratio of 3:1 and Q and R are partners of R & Co., sharing profits and losses in the ratio of 2:1. On 31 st^ March, 2009, they decide to amalgamate and form a new firm M/s PQR & Co., wherein P, Q and R would be partners sharing profits and losses in the ratio of 3:2:1. The Balance Sheets of two firms on the above date are as under: Liabilities P & Co. Rs.
R & Co. Rs.
Assets P & Co. Rs.
R & Co. Rs. Capitals: P Q R Reserves Sundry creditors Due to P & Co. Bank overdraft
Fixed assets: Building Plant & machinery Office equipment Current assets: Stock-in-trade Sundry debtors Bank balance
May 2010
(viii )
Patents and Copyright and Goodwill have no more value.
Pass necessary journal entries in the books of XYZ Ltd. assuming that all the legal formalities have been completed. Prepare capital reduction account and Balance Sheet of the company after
- reduction.(a) Ram Limited of Chennai has a branch at Nagpur to which office, goods are invoiced at cost plus 25%. The branch makes sales both for cash and on credit. Branch expenses are paid direct from Head Office and the branch has to remit all cash received into the Head Office Bank Account at Nagpur. From the following details, relating to the year 2009, prepare the accounts in Head Office Ledger and ascertain Branch Profit as per stock and debtors method. Branch does not maintain any books of accounts, but sends weekly returns to head office:
Rs. Goods received from head office at invoice price Returns to head office at invoice price Stock at Nagpur branch on 1.1.2009 at invoice price Sales during the year – Cash Credit Debtors at Nagpur branch as on 1.1. Cash received from debtors Discounts allowed to debtors Bad debts during the year Sales returns at Nagpur branch Salaries and wages at branch Rent, rates and taxes at branch Office expenses at Nagpur branch Stock at branch on 31.12.2009 at invoice price
(b) From the following information furnished to you by Ayushman Insurance Co. Ltd., you are required to pass Journal entries relating to unexpired risk reserve and show in columnar form “Unexpired Risks Reserve Account” for 2009. (a )
On 31.12.2008, it had reserve for unexpired risks amounting to Rs.40 crores. It comprised of Rs.15 crores in respect of marine insurance business, Rs.20 crores in respect of fire insurance business and Rs.5 crores in respect of miscellaneous insurance business. (b )
Ayushman Insurance Co. Ltd. creates reserves at 100% of net premium income in respect of marine insurance policies and at 50% of net premium income in respect of fire and miscellaneous income policies. (c )
During 2009, the following business was conducted: Marine (Amount in crores) Fire Miscellaneous Premium collected from: (a) Insured in respect of policies issued (b) Other insurance companies in respect of risks undertaken Premium paid/payable to other insurance companies on business ceded
May 2010
- (a) Given below is an extract from the trial balance of T.K. Bank Limited as on 31st December,
2009: Particulars Debit. Rs.
Credit Rs. Bills discounted Rebate on bills discounted (1.1.2009) Discount received for the year
An analysis of the bills discounted is shown below:
Amount Rs.
Due date in 2010
Rate of discount (% p.a.) 1,40, 4,36, 2,82, 4,06,
March 6th March 12th March 26th April 6th
Show the workings, how the relevant items will appear in the bank’s Profit and Loss account as on 31st December, 2009 and in bank’s Balance Sheet as on 31 st^ December, 2009.
(b) From the following Trial Balance of PQ Ltd. on 31.12.2009, prepare liquidators’ final statement of account: Rs. Rs. 9% Preference share capital (1,250 Preference shares @ Rs.100 each fully paid up) Equity share capital: 2,000 Equity shares @ Rs.100 each fully paid up 2,000 Equity shares @ Rs.100 each, Rs.50 paid up Plant Stock-in-trade Sundry debtors Sundry creditors Bank balance Preliminary expenses 6% Mortgage loan Outstanding liabilities for expenses Profit and loss account (Trading loss for the year 2009)
Following points should be kept in mind:
(i) On 21st January, 2010 the liquidator of PQ Ltd. sold plant for Rs.2,95,000 and stock in trade at 10% less than the book value. He realised 80% of Sundry debtors and incurred cost of collection of Rs.1,850 (remaining debtors are to be treated as bad). (ii) The loan mortagage was discharged on 31 st^ January, 2010 along with interest for 6 months. Creditors were discharged subject to 5% discount. Outstanding expenses paid at 20% less.
The present value of annuity of Re.1 due at the end of 3 rd^ year at 10% IRR is Rs.2.4868. State whether the lease constitute finance lease and also calculate unearned Finance income. (d) ABC Electricity Company laid down a main at a cost of Rs.24,00,000. Some years later the company replaced by improving the plant 2/3 portion of the main at a cost of Rs.40,00,000. The cost of material and labour having gone up by 25%. Sale of old material realised Rs.95,000. Old material value Rs.1,05,000 were used in renewal (including in above). Calculate the amount to be capitalised and show the journal entries for recording the transaction.
