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Q1) 5M

Sun Limited wishes to obtain a machine costingRs.30 lakhs by way of lease. The
effective life of the machine is 14 years, but the company requires it only for the first 5
years. It enters into an agreement with Star Ltd., for a lease rental for Rs.3 lakhs p.a.
payable in arrears and the implicit rate of interest is 15%. The chief accountant of Sun
Limited is not sure about the treatment of these lease rentals and seeks your advice.
(use annuity factor at @ 15% for 3 years as 3.36)

Q2) 5M

The following information is available for TON Ltd. for the accounting year 2015-16 and

Net Profit For Rs

Year 2015-16 35,00,000

Year 2016-17 45,00,000

No of shares outstanding prior to right issue 15, 00,000 shares

Right issue: One new share for each 3 shares outstanding i.e. 5, 00,000 shares.
: Right Issue price Rs. 25
: Last date to exercise right 31st July, 2016

Fair value of one equity share immediately prior to exercise of rights on 31.07.2016 is
Rs. 35
You are required to compute:

(i) Basic earnings per share for the year 2015-16.

(ii) Restated basic earnings per share for the year 2015-16 for right issue
(iii) Basic earnings per share for the year 2016-17.

Q3) 5M

During 2016-17, an enterprise incurred costs to develop and produce a routine, low risk
computer software product, as follows:
Amount (Rs.)
Completion of detailed programme 25,000
and design
Coding and Testing 20,000
Other coding costs 42,000
Testing costs 12,000
Product masters for training materials 13,000


Packing the product (1,000 units) 11,000

What amount should be capitalized as software costs in the books of the company, on
Balance Sheet date?

Q4) 6M

Gemini Ltd. came up with public issue of 30, 00,000 Equity shares of ₹ 10 each at
₹ 15 per share. A, B and C took underwriting of the issue in 3: 2: 1 ratio.
Applications were received for 27, 00,000 shares.
The marked applications were received as under:

A 8, 00,000 shares
B 7, 00,000 shares
C 6, 00,000 shares
Commission payable to underwriters is at 5% on the face value of shares

(i) Compute the liability of each underwriter as regards the number of shares to
be taken up.
(ii) Pass journal entries in the books of Gemini Ltd. to record the transactions
relating to underwriters

Q5) 8M

A commercial bank has the following capital funds and assets. Segregate the capital
funds into Tier I and Tier II capitals. Find out the risk-adjusted asset and risk weighted assets
ratio –

Capital Funds: (Figures in ₹ lakhs)

Equity Share Capital 4, 80, 00
Statutory Reserve 2, 80, 00
Capital Reserve (of which ₹ 280 lakhs were due 12, 10
to revaluation of assets and the balance due to sale)
Cash Balance with RBI 4, 80

Balances with other Bank 12, 50

Claims on Banks 28, 50
Other Investments 782, 50
Loans and Advances:
(i) Guaranteed by government 128, 20
(ii) Guaranteed by public sector 702, 10
undertakings of Government of India
(iii) Others 52, 02, 50
Premises, furniture and fixtures 182, 00


Other Assets 201, 20

Off-Balance Sheet Items:
Acceptances, endorsements and letters of credit 37, 02, 50

Q6) 8M
Buckingham Bros, Bombay have a branch at Nagpur. They send goods at cost to their branch at
Nagpur. However, direct purchases are also made by the branch for which payments are made at
head office. All the daily collections are transferred from the branch to the head office.

From the following, prepare Nagpur branch account in the books of head office by Debtors

Rs Rs
Opening balance (1-1-2012) Bad Debts 1,000
Imprest Cash 2,000
Sundry Debtors 25,000 Discount to Customers 2,000
Stock: Transferred from H.O. 24,000 Remittances to H.O.
Direct Purchases 16,000 (recd. by H.O.) 1,65,000

Cash Sales 45,000 remittances to H.O.

Credit Sales 1,30,000 (not recd. by H.O. so far) 5,000
Direct Purchases 45,000 Branch Exp. directly paid by 30,000
Returns from Customers 3,000 Closing Balance (31-12-2012)
Goods sent to branch from H.O. 60,000 Stock: Direct Purchase 10,000
Transfer from H.O. for Petty Transfer from H.O. 15,000
Cash Exp. 4,000 Debtors ?
Imprest Cash ?


Pass necessary Journal entries in the books of an independent Branch of M/s TPL Sons,
wherever required, to rectify or adjust the following transactions

(i) Branch paid Rs 5,000 as salary to a Head Office Manager, but the
amount paid has been debited by the Branch to Salaries Account.
(ii) A remittance of Rs 1,50,000 sent by the Branch has not received by Head
Office on the date of reconciliation of Accounts.
(iii) Branch assets accounts retained at head office, depreciation charged
for the year Rs 15,000 not recorded by Branch.
(iv) Head Office expenses Rs 75,000 allocated to the Branch, but not yet been
recorded by the Branch.
(v) Head Office collected Rs 60,000 directly from a Branch Customer. The


intimation of the fact has not been received by the Branch.

(vi) Goods dispatched by the Head office amounting to Rs 50,000, but not
received by the Branch till date of reconciliation.
(vii) Branch incurred advertisement expenses of Rs 10,000 on behalf of other
Branches, but not recorded in the books of Branch.
(viii) Head office made payment of Rs 16,000 for purchase of goods
by branch, but not recorded in branch books
Q8) 6M

On 1st January, 2006 Raman Ltd. (company is not governed by section 133 of
Companies Act, 2013) allotted 20,000 9% Debentures of₹100 each at par, the total
amount having been received along with applications.

(i) On 1st January, 2008 the Company purchased in the open market 2,000 of its own
debentures @₹ 101 each and cancelled them immediately.

(ii) On 1st January, 2011 the company redeemed at par debentures for₹6,00,000 by
draw of a lot.

(iii) On 1st January, 2012 the company purchased debentures of the face value
of₹4,00,000 for 3,95,600 in the open market, held them as investments for one year and
then cancelled them.

(iv) Finally, as per resolution of the board of directors, the remaining debentures were
redeemed at a premium of 2% on 1st January, 2016 when Securities Premium Account
in the company's ledger showed a balance of₹60,000.

You are required to pass journal entries for the above-mentioned transactions ignoring
debenture redemption reserve, debenture interest and interest on own' debentures.