NOVEMBER 2015 IPCC MOCK EXAM

Transcription

1 NOVEMBER 2015 IPCC MOCK EXAM ACCOUNTING GROUP 1 CA Gaurav Rajaram CA Punarvas Jayakumar gaurav@samvitacademy.in punarvas@samvitacademy.in (1)

2 Roll No.... Total number of Questions - 7 Total number of Printed Pages - 10 Time Allotted - 3 Hours Maximum Marks HAL Question No 1 is compulsory. Candidates are required to answer any five out of the remaining six questions Working notes should form part of the answer Wherever necessary, suitable assumptions should be made and indicated in the answer by the candidates 1. (a) Calculate closing inventory in the following cases: (i) A company had 5,000 units of stock A, Rs 50 each on Out of this stock, 3,000 units are to be supplied under a firm contract at Rs 45 each. Show how the valuation will be done of such stock when a. The general selling price is Rs 49 each. b. The general selling price is Rs 52 each. (ii) An enterprise ordered 13,000 kg of raw materials at Rs 95 per unit. The purchase price includes excise duty of Rs 5 on which full CENVAT credit is admissible. Freight incurred is Rs 80,600. Normal loss is 4%. The enterprise consumed 11,000 kg. Abnormal Loss during production was 500 units. (b) The Board of Directors decided on to increase the sale price of certain items retrospectively from 1st January, In view of this price revision with effect from 1st January 2015, the company has to receive Rs 25 lakhs from its customers in respect of sales made from 1st January, 2015 to 31st March, The Accountant cannot make up his mind whether to include Rs 25 lakhs in the sales for Advise as per the relevant accounting standard. (c) In the Trial Balance of M/s. Moon Ltd. as on , balance of machinery appears at Rs 11,20,000 before charging depreciation during the year. The company follows rate of depreciation on 10% p.a. on Written Down Value Method. On scrutiny it was found that a machine appearing in the books on at Rs 3,20,000 was disposed of on at Rs 2,70,000 in part exchange of a new machine costing Rs 3,00,000. (2)

3 You are required to calculate: (i) Total depreciation to be charged in the Profit and Loss Account (ii) Loss on exchange of machine (iii) Book value of machinery in the Balance Sheet as on after adjustments (d) ABC & Sons Ltd. are Heavy Engineering contractors specializing in construction of bridges. From the records of the company, the following data is available pertaining to year ended on 31st March, Using this data and applying the relevant Accounting Standard you are required to: (i) Compute the amount of profit/loss for the year ended 31st March, (ii) Arrive at the contract work in progress (cost incurred till date) as at the end of financial year (iii) Determine the amount of revenue to be recognized out of the total contract value. (Rs crore) Total Contract Price 2,400 Work Certified 1,250 Work pending certification 250 Estimated further cost to completion 1,750 Stage wise payments received 1,100 Progress payments in pipe line 300 (e) Amna Ltd. contracted with a supplier to purchase a specific machinery to be installed in Department A in two months time. Special foundations were required for the plant, which were to be prepared within this supply lead time. The cost of site preparation and laying foundations were Rs 47,290. These activities were supervised by a technician during the entire period, who is employed for this purpose of Rs 15,000 per month. The Technician's services were given to Department A by Department B, which billed the services at Rs 16,500 per month after adding 10% profit margin. The machine was purchased at Rs 52,78,000. Sales Tax was charged at 4% on the invoice, Rs 18,590 transportation charges were incurred to bring the machine to the factory. An Architect was engaged at a fee of Rs 10,000 to supervise machinery installation at the factory premises. Also, payment under the invoice was due in 3 months. However, the Company made the payment in 2nd month. The company operates on Bank Overdraft@ 11%. Ascertain the amount at which the asset should be capitalized under AS 10. (5*4 = 20 Marks) (3)

4 2. Laurel and Hardy are partners of the firm LH & Co., from Initially both of them contributed Rs 1,00,000 each as capital. They did not contribute any capital thereafter. They maintain accounts of the firm on mercantile basis. They were sharing profits and losses in the ratio of 5:4. After the accounts for the year ended were finalized, the partners decided to share profits and losses equally with effect from It was also discovered that in ascertaining the results in the earlier years certain adjustments, details of which are given below, had not been noted. Year ended 31st March Profit as per accounts 1,40,000 2,60,000 3,20,000 3,60,000 prepared and finalized Expenses not provided for 30,000 20,000 36,000 24,000 (as at 31st March) Incomes not taken into account (as at 31st March) 18,000 15,000 12,000 21,000 The partners decided to admit Chaplin as a partner with effect from It was decided that Chaplin would be allotted 20% share in the firm and he must bring 20% of the combined capital of Laurel and Hardy. Following is the Balance sheet of the firm as on before admission of Chaplin and before adjustment of revised profits between Laurel and Hardy. Balance Sheet of LH & Co. as at Liabilities Rs Assets Rs Capital Accounts Plant and machinery 60,000 Laurel 2,11,500 Cash on hand 10,000 Hardy 1,51,500 Cash at bank 5,000 Stock in trade 3,10,000 Trade Payables 2,27,000 Trade Receivables 2,05,000 Total 5,90,000 Total 5,90,000 You are required to prepare: (i) Profit and Loss Adjustment account; (ii) Capital accounts of the partners; and (iii) Balance Sheet of the firm after the admission of Chaplin. (16 Marks) (4)

5 3. Following is the summarized Balance Sheet of Udyog Ltd. as at 31st March, 2015: Liabilities Rs Assets Rs 15,000 10% Preference Shares of Rs 100 each 15,00,000 Land & Building Plant & Machinery 15,00,000 10,00,000 35,000 Equity Shares of Rs 100 each 35,00,000 Inventory 6,00,000 Securities Premium 1,00,000 Trade Receivables 15,00,000 7% Debentures of Rs 100 each 5,00,000 Cash at Bank 1,00,000 Trade Payables 12,50,000 P&L Account 23,00,000 Loan from Director 1,50,000 Total 70,00,000 Total 70,00,000 No dividend on Preference shares has been paid for the last 5 years. The following scheme of reorganization was duly approved by the Court: (i) Each Equity share to be reduced to Rs 25. (ii) Each existing Preference share to be reduced to Rs 75 and then exchanged for 1 new 13% Preference share of Rs 50 each and 1 Equity share of Rs 25 each. (iii) Preference shareholders have forgone their right for dividend for four years. One year s dividend at the old rate is however, payable to them in fully paid equity Shares of Rs 25. (iv) The Debenture holders be given the option to either accept 90% of their claims in cash or to convert their claims in full into new 13% Preference shares of Rs 50 each issued at par. One half (in value) of the debenture holders accepted Preference shares for their claims. The rest were paid cash. (v) Contingent liability of Rs 1,50,000 is payable, which has been created by wrong action of one Director. He has agreed to compensate this loss out of the loan given by the Director to the company. (vi) 40,000 new Equity shares of Rs 25 each are to be issued at par, payable in full on application. Shares were fully taken up. (5)

6 (vii) Decrease the value of Plant and Machinery, Inventory and Trade receivables by Rs 4,00,000, Rs 1,00,000 and Rs 1,50,000 respectively. Increase the value of Land and Buildings to Rs 18,00,000. (viii) The total expenses incurred by the company in connection with the scheme excluding underwriting commission amounted to Rs 15,000. Pass necessary Journal Entries to record the above transactions and show the Balance Sheet of the Company after the reconstruction. (16 Marks) 4. (a). On 1st April 2014, Sharma had 30,000 equity shares in Xavier Ltd. Face value of the shares was Rs 10 each but their book value was Rs 16 per share. On 1st June 2014, Sharma purchased 5,000 more equity shares in the company at a premium of Rs 4 per share. On 30th June, 2014, the directors of X Ltd. announced a bonus and rights issue. Bonus was declared at the rate of one equity share for every five shares held and these shares were received on 2nd August, The terms of the rights issue were: (i) Rights shares to be issued to the existing holders on 10th August, (ii) Rights issue would entitle the holders to subscribe to additional equity shares in the Company at the rate of one share per every three held at Rs 15 per share - the whole sum being payable by 30th September, (iii) Sharma exercised his option under the issue for 50% of his entitlements and the balance of rights he sold to Anand for a consideration of Rs 1.50 per share. (iv) Dividends for the year ended 31st March, 2014, at the rate of 15% were declared by the Company and received by Sharma on 20th October, (v) On 1st January, 2015, Sharma sold 20,000 equity shares at a premium of Rs 3 per share. The market price of share on was Rs 13. Show the Investment Account as it would appear in Sharma s books on and the value of shares held on that date. (8 Marks) (6)

7 (b) J Ltd. presents you the following information for the year ended 31st March, 2015: (Rs in lacs) (i) Net profit before tax provision 36,000 (ii) Dividend paid 10,202 (iii) Income-tax paid 5,100 (iv) Book value of assets sold 222 Loss on sale of asset sold 48 (v) Depreciation debited to P & L account 24,000 (vi) Capital grant received - amortized to P & L A/c 10 (vii) Book value of investment sold 33,318 Profit on sale of investment 120 (viii) Interest income from investment credited to P & L A/c 3,000 (ix) Interest expenditure debited to P & L A/c 12,000 (x) Interest actually paid (Financing activity) 13,042 (xi) Increase in working capital 67,290 [Excluding cash and bank balance] (xii) Purchase of fixed assets 22,092 (xiii) Expenditure on construction work 41,688 (xiv) Grant received for capital projects 18 (xv) Long term borrowings from banks 55,866 (xvi) Provision for Income-tax debited to P & L A/c 6,000 Cash and bank balance on ,000 Cash and bank balance on ,000 You are required to prepare a cash flow statement as per AS-3 (Revised). (8 Marks) (7)

8 5. Following is the Receipts and Payments Account of Mayur Club (not registered under Companies Act, 2013) for the year ended 31st March, 2015: Receipts Rs Payments Rs Opening balance ( ) Sports materials 3,04,500 Cash on hand 39,100 Salaries 3,15,000 Cash at bank 50,000 Equipment purchased on ,000 Bank fixed deposits on ,50,000 Subscriptions Rent 1,48,500 For the year ,000 Ground maintenance 22,120 For the year ,63,000 Insurance 38,400 For the year ,500 Stationery 3,450 Interest on bank Sundry expenses 5,880 Fixed 45,000 Closing balance as on Cash on hand 31,750 Cash at bank 40,000 Total 11,19,600 Total 11,19,600 Following additional information is provided to you: (i) The club has 220 members. The annual subscription is Rs 4,500 per member. (ii) Depreciation to be provided on furniture at 10% p.a. and on sports equipment at 15% p.a. (iii) On 31st March, 2015, stock of sports material in hand (after members use during the year) is valued at Rs 78,000 and stock of stationery at Rs 3,150. Rent for 1 month is outstanding. Unexpired insurance amounts to Rs 9,600. (iv) On 31st March, 2014 the club had the following assets: Furniture Rs 2,70,000 Sports equipment Rs 1,80,000 Bank fixed deposit Rs 4,50,000 Stock of stationery Rs 1,500 Stock of sports material Rs 73,500 Unexpired insurance Rs 8,400 Subscription in arrear Rs 22,500 Note: There was no liability on You are required to prepare: (i) Income and Expenditure Account; and (ii) Balance Sheet as at 31st March, (16 Marks) (8)

9 6. (a) The following extract of Balance Sheet of X Ltd. (a non-investment company) was obtained: Balance Sheet (Extract) as on 31st March, 2015 Liabilities Rs Authorised capital: 15,000, 14% preference shares of Rs ,00,000 1,50,000 Equity shares of Rs 100 each 3,00,00,000 3,30,00,000 Issued and subscribed capital: 15,000, 14% preference shares of Rs 100 each fully paid 30,00,000 1,20,000 Equity shares of Rs 100 each, Rs 80 paid-up 192,00,000 Capital reserves (Rs 3,00,000 is revaluation reserve) 3,90,000 Securities premium 1,00,000 15% Debentures 130,00,000 Unsecured loans: Public deposits repayable after one year 7,40,000 Investment in shares, debentures, etc. 150,00,000 Profit and Loss account (debit balance) 30,50,000 You are required to compute Effective Capital as per the provisions of Schedule V to Companies Act, (4 Marks) (b)futura Ltd. had the following items under the head Reserves and Surplus in the Balance Sheet as on 31st March, 2015: Amount Rs in lakhs Securities Premium Account 160 Capital Reserve 120 General Reserve 180 The company had an accumulated loss of Rs 500 lakhs on the same date, which it has disclosed under the head Statement of Profit and Loss as asset in its Balance Sheet. Comment on accuracy of this treatment in line with Schedule III to the Companies Act, 2013 (4 Marks) (c) On the stock of Mr. YNK traders was destroyed by fire. However, following particulars were furnished from the records saved: Stock at cost on ,35,000 Stock at 90% of cost on ,62,000 Purchases for the year ended ,45,000 (9)

10 Sales for the year ended ,00,000 Purchases from to ,25,000 Sales from to ,80,000 Sales upto includes Rs 75,000 being the goods not dispatched to the customers. Purchases upto includes a machinery acquired for Rs 15,000. Purchases upto does not include goods worth Rs 30,000 received from suppliers, as invoice not received upto the date of fire. These goods have remained in the godown at the time of fire. The insurance policy is for Rs 1,80,000 and it is subject to average clause. Ascertain the amount of claim for loss of stock. (8 Marks) 7. Answer any 4 out of the following 5 (a) Two traders Abhinav and Krishna buy goods from one another, each allowing the other one month s credit. At the end of 3 months the accounts rendered are as follows: Goods sold by Abhinav to Krishna Goods sold by Krishna to Abhinav Rs Rs 18th April 9,000 23rd April 7,800 15th May 10,500 24th May 7,500 16th June 12,000 Compute the date upon which the balance should be paid, so that no interest is due either to Abhinav or Krishna. (b) From the following, prepare an account current, as sent by A to B on 30th June, 2012 by means of products method charging 6% p.a: Rs Jan. 1 Balance due from B 600 Jan.11 Sold goods to B 520 Jan. 18 B returns Goods 125 Feb 11 B Paid by cheque 400 Feb 14 B accepted a bill drawn by A for one month 300 Apr. 29 Goods sold to B 615 May 15 Received cash from B 700 (c) On Shaan Ltd. purchased a machine on hire purchase basis. The terms of agreement provided for 40% as cash down payment and the balance in three instalments of Rs 1,63,000 on , Rs 1,20,000 on and Rs 1,10,000 on The rate of interest charged by the vendor is 10% p.a. compound annually. You are required to calculate the cash Price charged by hire vendor (10)

11 (d) Akhilesh runs ABC printers, a small printing firm. He was maintaining only some records, which he thought, were sufficient to run the business. On 1 April 2000 available information from his records indicated that ABC printers had the following assets and liabilities: Printing Press Rs. 5,00,000; Building Rs. 2,00,000; Stock of press material Rs.50,000; Cash at bank Rs. 65,600; Cash in Hand Rs.7,980; Dues from customers Rs.20,350; Payments due to Accounts Payable Rs.75,340; and Wages pending to workers Rs.5,000. He withdrew Rs. 8,000 every month for meeting his expenses. He had also introduced Rs. 15,000 during the year as additional capital. On 31 March 2001 his position was as follows: Press Rs. 5,25,000; Building Rs. 2,00,000; Stock of press material Rs. 55,000; Cash at Bank Rs. 40,380; Cash in hand Rs.15,340; Dues from Customer Rs.17,210; Payments due to accounts payable Rs. 65,680. Using Statement of Affairs method, calculation the profit made by ABC printers during the year. (e) A large size hospital decided to outsource the accounting functions. The Hospital invited proposals from vendors through open tender and received three proposals. How will you select the vendor? (4*4 =16 Marks) (11)