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CA IPCC - Sample / Mock Test Paper - ADVANCED ACCOUNTING 2011

5 pages, 24 questions, 1 questions with responses, 1 total responses,

CA IPCC
Tilak Vidyalaya Higher Secondary School (TVHSS), Kallidaikurichi

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Paper 5: Advanced Accounting Answer all questions. Working notes should form part of the answer. (Maximum marks 100) (Time allowed three hours) 1. A, V, R and S are partners in a firm sharing profits and losses in the ratio of 4 : 1 : 2 : 3. The following is their Balance Sheet as at 31st March, 2009 : Liabilities Sundry Creditors Rs. 3,00,000 Capital A/cs : A 7,00,000 S 3,00,000 Assets Sundry Debtors Rs. 3,50,000 Less: Doubtful Debts Cash in hand 10,00,000 50,000 Stocks Other Assets 3,00,000 1,40,000 2,00,000 3,10,000 Capital A/cs: V 2,00,000 R 1,50,000 13,00,000 3,50,000 13,00,000 On 31st March, 2009, the firm is dissolved and the fo llowing points are agreed upon: 1. Ajay is to takeover sundry debtors at 80% of book value 2. Shyam is to takeover the stocks at 95% of the value and 3. Ram is to discharge sundry creditors. 4. Other assets realise Rs. 3,00,000 and the expenses of real isation come to Rs. 30,000. 5. Vijay is found insolvent and Rs. 21,900 is realised from his estate. Prepare Realisation Account and Capital Accounts of the partners. Show also the Cash A/c. The loss arising out of capital deficiency may be distributed fo llowing the decision in Garner vs Murray. (16 Marks) 2.(a) On 31st March, 2008, Uncertain Bank Ltd. had a balance of Rs. 9 crores in rebate on bills discounted account. During the year ended 31st March, 2009, Uncertain Bank Ltd. discounted bills of exchange of Rs. 4,000 crores charging interest at 18% per annum the average period of discount being for 73 days. Of these, bills of exchange of Rs. 600 crores were due for realisation from the acceptors/customers after 31st March, 2009, the average period outstanding after 31st March, 2009 being 36.5 days. Uncertain Bank Ltd. asks you to pass journal entries and show the ledger accounts pertaining to : (i) discounting of bills of exchange and (ii) rebate on bills discounted. (8 Marks) 2.(b) X Fire Insurance Co. Ltd. commenced its business on 1.4.200 8. It submits you the following information for the year ended 31.3.200 9: Rs. 20 Premiums received 15,00,000 Re-insurance premiums paid 1,00,000 Claims paid 7,00,000 Expenses of Management 3,00,000 Commissi on paid 50,000 Claims outstanding on 31.3.2009 1,00,000 Create reserve for unexpired risk @ 40% Prepare Revenue account for the year ended 31.3.200 9. (8 Marks) 3.(a) Super Express Ltd. and Fast Express Ltd. were in competing business. They decided to form a new company named Super Fast Express Ltd. The balance sheets of both the companies were as under: Super Express Ltd. Balance Sheet as at 31st December, 2008 Rs. 20,000 Equity shares of Rs. 100 each Rs. 20,00,000 Buildings 10,00,000 Provident fund 1,00,000 Machinery 4,00,000 Sundry creditors Insurance reserve 60,000 1,00,000 Stock Sundry debtors 3,00,000 2,40,000 Cash at bank Cash in hand 2,20,000 1,00,000 22,60,000 22,60,000 Fast Express Ltd. Balance Sheet as at 31st December, 2008 Rs. 10,000 Equity shares of Rs. 100 each Employees profit sharing account Rs. 10,00,000 60,000 Goodwill Buildings 1,00,000 6,00,000 Sundry creditors Reserve account 40,000 1,00,000 Machinery Stock 5,00,000 40,000 Surplus 1,00,000 Sundry debtors Cash at bank Cash in hand 13,00,000 40,000 10,000 10,000 13,00,000 The assets and liabilities of both the companies were taken over by the new company at their book values. The companies were allotted equity shares of Rs. 100 each in lieu of pur chase consideration. Prepare opening balance sheet of Super Fast Express Ltd. (8 Marks) 21 3.(b) Head Office passes adjustment entry at the end of each month to adjust the position arising out of inter branch transactions during the month. From the following inter branch transactions in January, 2009, make the entry in the books of Head Office : (a) Bombay Branch (1) Received Goods : Rs. 6,000 from Calcutta Branch, Rs, 4,000 from Patna Branch. (2) Sent Goods to Rs. 10,000 to Patna, Rs, 8,000 to Calcutta. (3) Received B/R : Rs. 6,000 from Patna. (4) Sent Acceptance : Rs. 4,000 to Calcutta, Rs. 2,000 to Patna. (b) Madras Branch (Apart from the above) (5) Received Goods : Rs. 10,000 from Calcutta, Rs. 4,000 from Bombay. (6) Cash Sent : Rs. 2,000 to Calcutta, Rs. 6,000 to Bombay. (c) Calcutta Branch (Apart from the above) (7) Sent Goods to Patna : Rs. 6,000. (8) Paid B/P : Rs. 4,000 to Patna, Rs. 4,000 cash to Patna. (8 Marks) 4.(a) On 1st April, 2008, in MK Ltd s ledger 9% debentures appeared with a opening balance of Rs. 50,00,000 divided into 50,000 fully paid debentures of Rs. 100 each issued at par. Interest on debentures was paid half -yearly on 30th of September and 31 st March every year. On 31.5.2008, the company purchased 8,000 debentures of its own @ Rs. 98 (ex -interest) per debenture. On 31.12.2008 it cancelled 5,000 debentures out of 8,000 debentures acquired on 31.5.200 8. On 31.1.2009 it resold 2,000 of its own debentures in the market @ Rs. 101 (ex -interest) per debenture. You are required to prepare: (i) Own debentures account; (ii) Interest on debentures account; and (8 Marks) 4.(b) Anu Ltd. furnishes you with the following balance sheet as at 31 st March, 2008: (Rs. in crores) Sources of Funds Share Capital: Authorised 100 Issued: 12% redeemable preference shares of Rs.100 each fully paid 75 Equity shares of Rs.10 each fully paid Reserves and surplus: 25 Capital reserve Securities Premium 15 25 Revenue reserves 260 22 100 300 400 Application of Funds Fixed assets: cost 100 Less: Provision for depreciation Investments at cost (Market value Rs.400 Cr.) (100) Current assets Less: Current liabilities 340 40 nil 100 300 400 The company redeemed preference shares on 1 st April, 2008. It also bought back 50 lakh equity shares of Rs.10 each at Rs.50 per share. The payments for the above were made out of the huge bank balances, which appeared as a part of current assets. You are asked to: (i) Pass journal entries to record the above. (ii) Calculate the value of a equity share on net assets basis. (8 Marks) 5. Answer any ten from the following (Give adequate working notes in support of your answer): (i) Pass journal entries in year 1 in the case of the issue of debentures by ABC Co. Ltd.: Issued Rs. 1,00,000, 11% debentures at 95% redeemable at the end of 10 years at 102%. (ii) Net profit for the current year Rs. 1,00,00,000 No. of equity shares outstanding 50,00,000 Basic earnings per share No. of 12% convertible debentures of Rs. 100 each Rs. 2.00 1,00,000 Each debenture is convertible into 10 equity shares Interest expense for the current year Rs. 12,00,000 Tax relating to interest expense (30%) Compute Diluted Earnings per Share. Rs. 3,60,000 (iii) The company finds that the stock sheets of 31.3.2006 di d not include two pages containing details of inventory worth Rs. 14.5 lakhs. State, how you will deal with this matter in the accounts of U Ltd. for the year ended 31st March, 2007 with reference to AS 5. (iv) Goods purchased on 24.02.2005 for US $ 10 (Ex change rate 50) (Rate of exchange on 31.3.2005 51) Date of actual payment 5.6.2005 (Exchange rate 52) Calculate the amount of loss/gain to be recognized in the financial statements for the year ended 31st March, 2005. (v) An old electricity plant, which originally costed Rs. 10,00,000 in the year 1999, was replaced by spending Rs. 15,00,000. Present cost of its replacement was calculated as Rs. 13,00,000. Calculate the amount to be capitalized. 23 (vi) If goods are transferred from department A to department B at a price so as to include a profit of 50% on cost. Compute the amount of stock reserve on closing stock of Rs. 9,000 in department B. (vii) G Ltd. acquired assets worth Rs. 7,50,000 from H Ltd. by issue of sh ares of Rs. 100 at a premium of 25%. Compute the number of shares to be issued by G Ltd. to settle the purchase consideration. (viii) Explain the treatment of Refund of Government Grants as per AS -12 (ix) Explain finance lease as per AS 19. (x) When Capitalisation of borrowing cost should cease as per Accounting Standard 16? (xi) In which order does the accounts of partnership in case of dissolution, is settled under piecemeal distribution of cash? (xii) When will the liability of B List Contributories be c rystallized? (2 Marks each) 6. Answer any four out of five: (a) Explain the provisions of AS 26 relating to retirement and disposal of intangible assets. (b) X Co. Ltd., has obtained an Institutional Loan of Rs. 680 lakhs for modernisation and renovation of its plant & machinery. Plant & machinery acquired under the modernisation scheme and installation completed on 31.3.2008 amounted to Rs. 520 lakhs, 30 lakhs has been advanced to suppliers for additional assets and the balance loan of Rs. 130 lakhs has been utilized for working capital purpose. The total interest paid for the above loan amounted to Rs. 62 lakhs during 2007 -2008. You are required to state how the interest on the institutional loan is to be accounted for in the year 2007 -2008. (c) A company deals in petroleum products. The sale price of petrol is fixed by the government. After the Balance Sheet date, but before the finalisation of the company s accounts, the government unexpectedly increased the price retrospectively. Can the company account for additional revenue at the close of the year? Discuss. (d) Write a short note on Double Accounts System of presentation of financial statements by Electricity Supply Companies. (e) Mention the bases of measurement of elements of financial stat ements, as recognized by the conceptual framework issued by ICAI. (4 Marks each) 24

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Chartered Accountancy (ICAI India) : Integrated Professional Competence Course (IPCC) - Model / Mock Test Paper for Advanced Accounting Group II Paper 1

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