71480bos57500 p1 PDF
71480bos57500 p1 PDF
71480bos57500 p1 PDF
Value at which the two Bikes were taken back, calculated in (i) 98,000
above
Hence, loss to hire purchaser on machine taken back by hire
vendor (` 1,28,000 – ` 98,000) ` 30,000
(iv) Profit or loss on Bikes repossessed when sold by hire vendor
Sale proceeds 85,000
Less: Value at which Bikes were taken back 98,000
Repairs 5,000 (1,03,000)
Loss on resale 18,000
(b) Computation of claim for Loss of Stock
Calculation of the value of stock destroyed by fire: ` (in lakhs)
Value of stock as per Memorandum Trading A/c (W.N. 1) 550.00
Less: Salvaged value of stock 3.96
Value of claim to be lodged for loss of stock 546.04
As Policy amount is ` 600 lakhs and the insurable amount is 550 lakhs so average clause
will not be applicable. The value of claim is equal to value of loss i.e. ` 546.04 lakhs.
Computation of claim for loss of profit
` (in lakhs)
Short sales (given in the question) 180
Gross Profit:
Net Profit for the last financial year 52.50
Add: Insured Standing Charges 167.50
220.00
Turnover for the last financial year
Rate of Gross Profit = 220/2,000 X 100 = 11%
Sales for 12 months up to date of loss is ` 2,000 lakhs
Claim: Loss of profit for short sales (11% of `180 lakhs) 19.80
G.P. on sales up to the date of loss of fire is ` 220 lakhs
Insurable amount = ` 220 lakhs
Loss of profit policy taken = ` 250 lakhs
As policy amount is more than insurable amount average clause will not
be applicable.
Value of claim to be lodged for loss of profit = ` 19.80 lakhs
Working Notes:
1. Memorandum Trading Account
` (in lakhs) ` (in lakhs)
To Opening Stock 525 By Sales 100
To Purchases 110 By closing stock (bal. fig.) 550
To Gross profit*
(15% of 100 Lakhs) 15
650 650
* Gross profit ratio = 300/2000 = 15%
2. Trade Creditors A/c
` (in lakhs) ` (in lakhs)
To Bank A/c 106.68 By Balance b/d 106.68
To Balance c/d 110.00 By Purchases 110.00
(106.68 + 3.32)
216.68 216.68
Note: It is assumed that all standing charges are insured for the purpose of computation
of gross profit.
Question 3
(a) Stevie and Alicia are in partnership sharing profits and losses equally.
They maintain their books on Single Entry System.
The following balances are available from their books as on 31.3 .2021 and 31.3 .2022:
Particulars 31.3.2021 31.3.2022
` `
Building 3,00,000 3,00,000
Equipment 4,80,000 5,44,000
Furniture 50,000 50,000
Debtors ? 2,00,000
Creditors 1,30,000 ?
Stock ? 1,40,000
Bank loan 90,000 70,000
Cash 1,20,000 ?
The transactions during the year ended 31.3.2022 were the following:
Collection from Debtors 7,60,000
Payment to Creditors 5,00,000
Expenses Paid 80,000
Drawings by Stevie 60,000
Discount allowed 11,000
Discount received 9,600
Other information:
(i) On 1.4.2021, an equipment of book value ` 40,000 was sold for ` 30,000. On
1.10.2021, some more equipment were purchased.
(ii) Cash sales amounted to 10% of total sales.
(iii) Credit sales amounted to ` 9,00,000.
(iv) Credit purchases were 80% of total purchases.
(v) Cash Purchases amounted to ` 1,30,000.
(vi) The firm sells goods at cost plus 25%.
(vii) Outstanding expenses were ` 6,000 as on 31.3.2022.
(viii) Capital of Stevie as on 31.3.2021 was ` 30,000 more than the capital of Alicia,
equipment and furniture to be depreciated at 10% p.a. and building @ 2% p.a. (apply
depreciation of new equipment for 1/2 year)
You are required to prepare:
(i) Trading and Profit and Loss Account for the year ended31.3 .2022 and;
(ii) Balance Sheet as on that date. (12 Marks)
(b) PQR Limited has three departments L, M and N. The following information is provided for
the year ended 31.3 .2022:
L` M` N`
Opening stock 10,000 16,000 38,000
Opening reserve for unrealized Profit - 4,000 6,000
Materials Consumed 32,000 40,000 -
Direct labour 18,000 20,000 -
Closing stock 10,000 40,000 10,000
Sales - - 1,60,000
Area occupied (sq. mtr.) 5,000 3,000 2,000
No. of employees 60 40 20
Working Notes:
1. Calculation of total sales
Cash sales = 10% of total sales
Credit sales = 90% of total sales = ` 9,00,000
9,00,000
Total sales = ×100 = 10,00,000
90
Cash sales = 10% of 10,00,000 = ` 1,00,000
2. Calculation of total purchases
Cash purchases = ` 1,30,000
Credit purchases = 80% of total purchases
Cash purchases = 20% of total purchases
1,30,000
Total purchases = ×100 = ` 6,50,000
20
Credit purchases = 6,50,000 – 1,30,000 = ` 5,20,000
3. Calculation of opening stock
Stock Account
` `
To Balance b/d (Bal. Fig.) 2,90,000 By Cost of goods sold 8,00,000
10,00,000
× 100
125
Depreciation on equipment:
@ 10% p.a. on ` 4,40,000 (i.e. ` 4,80,000 – ` 40,000) = 44,000
@ 10% p.a. on ` 1,04,000 for 6 months (i.e. during the year) = 5,200
49,200
5. Calculation of closing balance of creditors
Creditors Account
` `
To Cash 5,00,000 By Balance b/d 1,30,000
To Discount received 9,600 By Credit purchases (W.N.2)
5,20,000
To Balance c/d (Bal. Fig.) 1,40,400
6,50,000 6,50,000
`
Combined Capitals of Stevie & Alicia 10,91,000
Less: Difference in capitals of Stevie & Alicia (30,000)
10,61,000
10,61,000
Stevie’s capital as on 31.3.2021= = 5,30,500 + 30,000 = ` 5,60,500
2
10,61,000
Alicia’s capital as on 31.3.2021 = = ` 5,30,500
2
8. Cash Account
` `
To Balance b/d 1,20,000 By Creditors 5,00,000
To Debtors 7,60,000 By Purchases 1,30,000
To Equipment (sales) 30,000 By Expenses 80,000
To Cash sales (W.N.1) 1,00,000 By Stevie’s drawings 60,000
By Bank loan paid
(90,000-70,000) 20,000
By Equipment purchased
(W.N.4) 1,04,000
By Balance c/d (Bal. Fig.) 1,16,000
10,10,000 10,10,000
Working Notes:
1. Calculation of Inter Department Transfer
(i) From Dept L to Dept M
Opening Stock + Material Consumed + Direct Labour Cost – Closing Stock
10,000 + 32,000 + 18,000 -10,000 = 50,000/-
Profit on transfer is 20% of Cost = ` 10,000/-. Hence transfer = ` 60,000
(ii) From Dept M to Dept N
Opening Stock + Material Consumed + Direct Labour + Inward Transfer –
Closing Stock
16,000 + 40,000 + 20,000 + 60,000 – 40,000 = ` 96,000/-
Profit on transfer = 20% of sale value i.e. 25% of cost price = ` 24,000
Hence, stock transferred to N at a value of ` 1,20,000
2. Calculation of unrealized profit on closing stock
(i) Stock reserve of M department
`
Cost - Material consumed + Direct labour cost 60,000
Transfer from L department 60,000
1,20,000
Closing Stock of M department 40,000
` 60,000
Proportion of stock of L department = ` 40,000 × ` 1,20,000 = ` 20,000
20
Stock reserve =` 20,000 = ` 3,333 (approx.)
120
(ii) Stock reserve of N department
`
Closing Stock (being stock transferred from M department) 10,000
Less: Profit (stock reserve) 10,000 20% (2,000)
Cost to M department 8,000
` 60,000
Proportion of stock of L department = ` 8,000 × = ` 4,000
` 1,20,000
20
Stock reserve = 4,000 × 120
= ` 667 (approx.)
Total stock reserve = ` 2,000 + ` 667 = ` 2,667
Question 4
Cool Limited was formed to take over a running business of Fire Enterprises with effect from
1st April,2021. The company was incorporated on 1st August,2021 and the certificate of
commencement of business was received on 1 st October 2021. No entries relating to the transfer
of the business were entered in the books which were continued until 31 st March,2022. The
following Trial Balance was extracted from the books as on 31 st March,2022.
Particulars Dr. (` ) Cr. (` )
Sales 19,20,000
Cost of Goods sold 15,54,000
Rent 80,000
Salaries 42,000
Travelling Expenses 16,800
Depreciation 9,600
Carriage outward 800
Printing & Stationary 4,800
Advertisement 16,000
Miscellaneous Expenses 25,200
Directors' fees 1,200
Managing Director's Remuneration 8,200
Bad debts 3,200
Commission & Brokerage to selling Agents 16,000
Audit fees 6,000
Interest on Debentures 3,000
Interest to Vendors 4,200
Selling & Distribution Expenses 24,000
Preliminary Expenses 3,000
Underwriting Commission 1,800
Fixed Assets 7,30,000
Current Assets 87,600
Cool Limited’s Capital as on 1 st April, 2021 5,56,000
Current Liabilities 61,400
Debentures 1,00,000
Total 26,37,400 26,37,400
Additional Information:
(a) Total Sales for the year arose evenly up to the date of the certificate of commencement
where-after they spurted to record an increase of two third during the rest of the year.
(b) The Company deals in one type of product. The unit cost of goods sold was reduced by
10% since 1st August, 2021 as compared to the pre incorporation period.
(c) Rent of old office building was increased by 20% since 1 st November,2021. It had to also
occupy additional space from 1 stJuly, 2021 for which rent was ` 6,000 p.m.
(d) The Salaries were tripled from 1 st July,2021.
(e) Travelling Expenses include ` 4,800 towards sales promotion.
(f) Depreciation includes, ` 600 for new assets acquired in August 2021.
(g) Purchase consideration was discharged by the company on 30 th September, 2021 by
issuing ` 60,000 Equity shares of ` 10 each.
You are required to prepare the Profit & Loss Statement in a columnar form for the year ended
31st March,2022 showing the allocation of profits between pre-incorporation and post-
incorporation periods indicating the basis of apportionment. (20 Marks)
Answer
Statement of Profit & Loss of Cool Limited for the year ended 31 st March,2022
showing the allocation of profits between pre and post incorporation periods
Particulars Note Pre- Post-
incorporation incorporation
` `
Revenue from Operations (W.N 2) 4,80,000 14,40,000
Other Income - -
I. Total Income 4,80,000 14,40,000
II Expenses:
Costs of Goods sold (W.N. 3) 4,20,000 11,34,000
Employee Benefits Expense 1 8,400 41,800
Finance Costs 2 2,800 4,400
Depreciation and Amortization Expense 3 3,000 6,600
Other Expenses 4 44,200 1,54,600
Total Expenses 4,78,400 13,41,400
III Profit for the Period (I-II) 1,600 98,600
Working Notes:
1. Time Ratio
Pre incorporation period = 1 st April, 2021 to 31 st July, 2021
i.e. 4 months
Post incorporation period is 8 months
Time ratio is 1: 2.
2. Sales ratio
Let the monthly sales for first 6 months (i.e. from 1.4.2021 to 30.09. 2021) be x
Then, sales for 6 months = 6x
2 5
Monthly sales for next 6 months (i.e. from 1.10.21 to 31.3.2022) = x + x= x
3 3
5
Then, sales for next 6 months = x X 6 = 10x
3
Total sales for the year = 6x + 10x = 16x
Monthly sales in the pre incorporation period = ` 19,20,000/16 = ` 1,20,000
Total sales for pre-incorporation period = ` 1,20,000 x 4 = ` 4,80,000
Total sales for post incorporation period = ` 19,20,000 – ` 4,80,000 = ` 14,40,000
Sales Ratio = 4,80,000 : 14,40,000
Sales Ratio = 1 : 3
3. Cost of goods sold
Cost of goods ratio between pre and post incorporation periods can be calculated as
follows:
Let cost of goods sold in the pre-incorporation period be `100
Then cost of goods sold in the post-incorporation period is `90
Sales Ratio (as calculated above) = 1:3
Then, cost of goods sold ratio = (100 x 1): (90 x 3) = 100: 270= 10:27
4. Apportionment of Rent `
Total Rent 80,000
Less: additional rent from 1.7.2021 to 31.3.2022 54,000
Rent of old premises for 12 months 26,000
8. Depreciation
Pre Post
` `
Total depreciation 9,600
Less: Depreciation exclusively for post incorporation period 600 600
Remaining (for pre and post incorporation period) 9,000
4
Depreciation for pre-incorporation period 9,000 3,000
12
8
Depreciation for post incorporation period 9,000 6,000
12
3,000 6,600
Question 5
(a) Given below is the extract of Balance Sheet of Daisy Limited as at 31st March,2021.
Particulars `
15% 650 Redeemable Preference Shares of ` 100 each, ` 80 per 52,000
share paid up
22,500 Equity Shares off ` 10 each, ` 9.50 per share paid up 2,13,750
Revaluation Reserve 45,000
Capital Reserve (realized in cash) 500
General Reserve 40,000
Securities Premium 500
Profit & Loss Account 40,500
Current Liabilities 1,07,750
Fixed Assets 3,71,500
Non-Current Investments [Face value ` 50,000] 1,00,000
Bank Balance 28,500
The following information are provided:
On 1st April,2021, the Board of Directors decided to make a final call of ` 20 on
Redeemable Preference Shares and to redeem the same at a premium of 10% on 1 st June,
2021.
The investments of the face value of ` 20,000 are sold at the market price which was 150%
of the face value.
Note: *Different combination of utilisation of available balances of general reserve and P&
L A/c is possible in the given entries.
** Securities premium has not been utilized for the purpose of premium payable on
redemption of preference shares assuming that the company referred in the question is
governed by Section 133 of the Companies Act, 2013 and hence the company has to
comply with the prescribed Accounting Standards.
*** As per the sequence of the information given in the question it has been considered
that the fresh issue of equity shares is made at the time of the redemption of preference
shares. Alternatively, it may be assumed that shares are issued after the redemption of
preference shares. In that case the amount transferred to Capital Redemption Reserve
will get changed.
Question 6
Answer any four of the following:
(a) The following information is provided by Exe Limited for 31st March,2022:
Particulars `
Net Profit before Income Tax and Managerial Remuneration, but after
Depreciation and Provision for Repairs 9,40,000
Depreciation provided in the Books 4,05,000
Provision for repairs for Machinery during the year 35,000
Depreciation Allowable under Schedule II 3,40,000
Actual Expenditure incurred on Repairs during the year 25,000
Provision for Income Tax 1,50,000
You are required to calculate the Managerial Remuneration for Exe Limited as on 31 st
March, 2022 in the following situations:
(i) There is only one Whole Time Director.
(ii) There are two Whole Time Directors.
(iii) There are two Whole Time Directors, a part time Director and a Manager.
(b) Following is the extract of the Balance Sheet of Sujata Foods Limited as at
31st March,2021:
Particulars `
Authorised Capital
1,00,000 12% Preference shares of ` 10 each 10,00,000
5,00,000 Equity shares of ` 10 each 50,00,000
60,00,000
Issued and Subscribed capital
8,000 12% Preference shares of ` 10 each fully paid 80,000
You are required to prepare Cash Flow Statement from Operating Activities in accordance
with AS-3 (revised) using the indirect method for the year ended 31 st March,2022.
(e) On 1st April 2021 Ms. Jayshree has 5,000 equity shares of Rama Limited (a listed company)
of face value of` 10 each. Ms. Jayshree has purchased the above shares at ` 15 per share
and paid a brokerage of 2% and stamp duty of 1 %.
On 15th May,2021 Ms. Jayshree purchased another 5,000 shares of Rama Limited at ` 18
including brokerage and stamp duty.
On 26th August,2021 Rama Limited issued one bonus equity share for every 1 equity share
held by the shareholders.
On 23rd October,2021 Rama Limited announced a Right Issue which entitles the holders
to subscribe 1 equity share for every 2 equity shares held at ` 20 per share. Shareholders
can exercise their rights in full or in part. Ms. Jayshree sold 1/4 th of entitlement to Mr. Mike
for a consideration of ` 10 per share and subscribed the rest on 1 st November 2021.
Ms. Jayshree also sold 10,000 shares at ` 25 per share on 1st November,2021.
The shares of Rama Limited were quoted at ` 11 per share on 31 st March,2022.
You are required to prepare Investment account for Ms. Jayshree for the year ended
31st March 2022. (4 Parts X 5 Marks = 20 Marks)
Answer
(a) Calculation of net profit u/s 198 of the Companies Act, 2013
` `
Net profit before income tax and managerial remuneration 9,40,000
but after depreciation and provision for repairs
Add: Depreciation provided 4,05,000
Provision for repairs 35,000 4,40,000
13,80,000
Less: Repairs 25,000
Depreciation as per schedule III 3,40,000 3,65,000
Profit u/s 198 10,15,000
(iv) False: Any change in the accounting policies which has a material effect in the current
period or which is reasonably expected to have a material effect in later periods
should be disclosed. Where such amount is not ascertainable, wholly or in part, the
fact should be indicated.
(d) Alpha Ltd.
Cash Flow Statement (from Operating Activities)
for the year ended 31 st March, 2022
` `
Cash flow from Operating Activities
Net profit before income tax and extraordinary items: 40,00,000
Adjustments for:
Depreciation on Property, plant and equipment 10,00,000
Discount on issue of debentures 60,000
Interest on debentures paid 7,00,000
Interest on investments received (1,20,000)
Profit on sale of investments (40,000) 16,00,000
Operating profit before working capital changes 56,00,000
Adjustments for:
Increase in inventory (2,36,000)
Increase in Sundry Debtors (10,200)
Decrease in Bills receivables 20,000
Increase in Sundry Creditors 10,600
Increase in Bills payables (10,000)
Increase in outstanding expenses 13,600 (2,12,000)
Cash generated from operations 53,88,000
Income tax paid (21,00,000)
Cash flow from ordinary items 32,88,000
Cash flow from extraordinary items:
Compensation received in a suit filed 1,80,000
Net cash flow from operating activities 34,68,000
Working Notes:
(1) Profit on sale of shares (average cost basis) on 1.11.21
10,000 shares @ ` 25 per share = 2,50,000
Cost of shares sold = [(77,250 + 90,000 + 1,50,000)/27,500 x 10,000]
= ` 1,15,364
Profit on sale of shares = ` 1,34,636
(2) Value of shares on 31.3.22 [(77,250 + 90,000 + 1,50,000)/27,500 x 17,500]
= ` 2,01,886 or ` 1,92,500 (17,500 shares at ` 11)
Shares will be valued at `, 1,92,500 as market value is less than cost.
Note: Average cost basis has been considered for valuation of shares at the year end and
for calculation of cost of shares sold in the given answer.