SuggeSted Answers

Nov- 2011 ( unofficial ) Group II Paper 5 Advance Accounting

Suggested Answers (Unofficial)

Advance Accounting

Que 1 (A)

Neel Ltd As per AS 16, Borrowing Cost that are directly attributable to "Qualifing Asset" can be Capitalised. Qualifing Asset Which takes a substantial period of time (> 1Year) to get ready for intented use or sale. Applying Provisions Of AS 16 Interest To Be Capitalised {28 Lakhs*12 Lakhs/70 Lakhs} 480,000 Interest to be charged to Profit & Loss A/c

Sr No. i)

Particulars Costruction of shade Purchase of Machinery

Nature Qualifing Asset Not Qualifing Asset Not Qualifing Asset Not Qualifing Asset 1,200,000

ii)

{21 Lakhs*12 lakhs/70 Lakhs} 360,000 {14 Lakhs*12 lakhs/70 Lakhs} 240,000 {7 Lakhs*12 lakhs/70 Lakhs} 120,000 480,000 720,000

iii)

Working Capital

iv)

Advance for Purchase of Truck Total

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Suggested Answers (Unofficial)

Advance Accounting

(C) Date

A Ltd Journal Entries Dr 2,940,000 Dr 60,000 Cr

Particulars 2010 Own Debentures A/c Dr 31-May Interest A/c Dr. To Bank A/c (Being purchase of own Debentures Ex-Int. at `98/- ) 30-Sep Interest A/c To Bank A/c (being half yearly interest paid) 2011 Interest A/c 31-Mar To Bank A/c (being half yearly interest paid) " 12% Debenture A/c Dr To Own Debentures A/c T0 Capital Reserve A/c ( Being Profit On Cancellation of own Debentures Stock)

3,000,000

Dr

600,000 600,000

Dr

600,000 600,000 3,000,000 2,940,000 60,000

( D) Date i)

Global Ltd Journal Entries Particulars Exps A/c To H/O A/c (being the Exps of H/O alloted to Branch) Depriciation A/c To H/O A/c (being the Depricition Charged By H/O ) H/O A/c To Salaries (Being Salary paid to H/O Inspector ) H/O A/c To Debtors (Being Cash Collected By H/O directly from Debtors) Dr Dr 135,000 Cr 135,000

ii)

Dr

115,000 -

115,000

iii)

Dr

140,000 -

140,000

iv)

Dr

130,000 -

130,000

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Suggested Answers (Unofficial) Que 2

Advance Accounting

In the books of partnership firm of P, Q, R & S

Realisation A/C Particulars To Land & Building To Furniture & Fixtures To Stock To Debtors To Cash A/C Creditors (36000+18000) Mortgage Loan Realisation Exps ` 246,000 65,000 100,000 72,500 Particulars By Creditors By Mortgage Loan By Cash A/C: Land & Building Furniture & Fixtures Stock Debtors By Capital A/C P (4/10) Q (3/10) R (2/10) S (1/10) 655,300 ` 36,000 110,000

54,000 110,000 7,800

230,000 42,000 72,000 65,000

409,000

171,800 40,120 30,090 20,060 10,030

100,300 655,300

Particulars To Balance B/D To Realisation A/C Land & Building Furniture & Fixtures Stock Debtors To Capital A/C P Q S To S's Capital A/C (final settlement)

230,000 42,000 72,000 65,000

Cash A/C ` Particulars 15,500 By Realisation A/C Creditors Mortgage Loan Realisation Exps 409,000 By Capital A/C P Q (Final Settlement) 80,240 6,000 510,740

` 54,000 110,000 7,800

171,800

338,940 203,364 135,576

40,120 30,090 10,030

510,740

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Suggested Answers (Unofficial)

Advance Accounting

Partners' Capital A/C Particulars To Balance B/D To Realisation A/C (Loss on Realisation) To R's Capital A/c To Cash A/C (Balancing Figure) P 40,120 12,636 203,364 Q 30,090 8,424 135,576 R 25,000 20,060 S P Particulars 18,000 By Balance B/D 168,000 10,030 By Genral Reserves 38,000 By Capital Reserves 10,000 - By Cash A/C 40,120 (Loss On Realisation made good) - By P By Q (Loss on insolvency) By Cash A/C (Bal. Fig) 28,030 256,120 Q 108,000 28,500 7,500 30,090 174,090 R 19,000 5,000 12,636 8,424 45,060 S 9,500 2,500 10,030 6,000 28,030

256,120

174,090

45,060

Working Notes: Calculation Of Capital Ratio Of Solvent Partners By Balance B/D By Genral Reserves By Capital Reserves Ratio 168,000 38,000 10,000 216,000 1.5 108,000 28,500 7,500 144,000 1

(216000/144000)

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Suggested Answers (Unofficial)

Advance Accounting

Que 3 1) Calculation of Purchase Consideration Paritculars X Ltd. - No. of outstanding shares 300,000 - market value per share 18 - Total market value 5,400,000 - Value per share of Z ltd. 16 - No. of shares ot be issued 337,500

Y Ltd. 180,000 20 3,600,000 16 225,000

No Of Share to be Received by X Ltd from Y Ltd. 15000*20/16 18,750 Value @ 16 300,000

WN Calculation of Goodwill Net Assets Taken over: Land & Building Plant & Machinery Stock Debtors Cash Totals Less: Creditors Loan Debentures Difference Total Purchase Consideration Goodwill

4,050,000 2,640,000 2,610,000 2,010,000 210,000 11,520,000

1,470,000 900,000 1,500,000 3,870,000 7,650,000 9,000,000 1,350,000

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Suggested Answers (Unofficial)

Advance Accounting

Particulars To Land & Building To Plant & Machinery To Stock To Debtors To Cash To Investments To Shareholders' A/c

Books X Ltd Realisation A/c ` Particulars 2700000 By Secured Loan 1500000 By Debentures 1560000 By Creditors 1230000 By Investments 90000 (Shares in Z Ltd) 240000 By Z Ltd 660000 (Purchase Consideration) 7980000 Equity Shareholders A/c ` Particulars By Equity Share Capital A/c 5400000 By Genral Reserve 300000 By Securities Premium By Profit & Loss A/c By Realisation A/c 5700000

` 0 1500000 780000 300000 5400000 7980000

Particulars To Shares In Z Ltd. A/c Purchase Consideration Fron Y Ltd

` 3000000 900000 600000 540000 660000 5700000

Particulars To Land & Building To Plant & Machinery To Stock To Debtors To Cash To Shareholders' A/c

Books Y Ltd Realisation A/c ` Particulars 1350000 By Secured Loan 1140000 By Debentures 1050000 By Criditors 780000 By Z Ltd 120000 570000 5010000 Equity Shareholders A/c ` Particulars 3600000 By Equity Share Capital A/c By Genral Reserve By Profit & Loss A/c By Realisation A/c 3600000

` 900000 0 510000 3600000

5010000

Particulars To Shares In Z Ltd. A/c

` 1800000 750000 480000 570000 3600000

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Suggested Answers (Unofficial)

Advance Accounting

Z Ltd Balance Sheet As on 1 April, 2011 Liabilities Share Capital 562500 Shares of `10 each Reserves & Surplus: Securities Premium (562500 shares @ ` 6) 10% Debentures Secured Loans Sundry Creditors ` Assests Goodwill (WN) 5625000 Land & Building Plant & Machinery Stock 3375000 Debtors Cash 1500000 900000 1470000 12870000 ` 1350000 4050000 2640000 2610000 2010000 210000

12870000

Note: Contigent Liability Is Included In Sundry Creditors

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Suggested Answers (Unofficial)

Advance Accounting

Que 4

M/s Access Electricity Company ` 90,000,000 (340,000) 2,400,000 760,000 2,760,000 95,580,000 30,000,000 1,200,000 12,000,000 1,000,000 2,000,000 1,600,000 47,800,000 47,780,000

i)Statement showing " Capital Base " A. 1. Fixed Assets Less: Contributions by Customers 2.Contingency Reserve Investments 3.Intangible Assests 4. Currents Assets (Ave Monthly) Less: Due from Customers Totals B. 1.Depriciasion Reserve 2.Development Reserve 3.Loan from Electricity Board 4. Security Deposites from Customers 5. Debentures (240000/12*100) 5.Tarrif & Dividend Totals Capital Base

3,460,000 700,000

ii) Statement showing "Reasonable Returns" 1. 12% on Capital Base 2. 8% on Govt. Securities 3. 1/2% on Loan from Electricity Board 4. 1/2% on Development Reserve 5. 1/2% on Debentures 5,733,600 400,000 60,000 6,000 10,000 6,209,600

iii) Statement of Diposal of Surplus Above 20 % of reasonable Returns 1.Surplus Clear Profit 7,500,000 Less: reasonablr Returns 6,209,600

1,290,400

2. 20% Of Reasonable Returns Amount to be credited to customers Account

1,241,920 48,480

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Suggested Answers (Unofficial)

Advance Accounting

iv) Disposal Of 20% Of Reasonable Returns Lower of bellow: 1/3 of Surplus or 5% of Reasonable Returns

1,241,920 430,133 310,480 BALANCE 310,480 931,440 465,720 465,720

1/2 To Tariff & Dividend Account 1/2 To Customers Account Disposal Of Clear profit 1.Amount for Disposal at company (Reasonable return + 310480) 2. Credited to Customers Account (465720 + 48480) 3. Credited To Tariffs & Dividend

6,520,080 514,200 465,720 7,500,000

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Suggested Answers (Unofficial)

Advance Accounting

Que 5 (A)

M/s AM Enterprises Trading A/C And Profit & Loss A/c For The Year Ended On 31 March, 2011 Particulars To Opening Stock To Purchases To Trf To Mfg Exps. To Gross Profit c/d Cloth Ready 3,150,000 532,000 21,000,000 168,000 3,150,000 630,000 4,200,000 917,000 28,350,000 5,397,000 Particulars By Sales By Trf By Closing Stock Cloth Ready 23,100,000 4,725,000 3,150,000 2,100,000 28,350,000 672,000 5,397,000

To Op.Stock Reserve (WN) To Selling Exps To Rent & Warehousing To Genral Reserve (WN) To Net Profit

210,000 840,000 651,000 2,499,000 4,200,000

80,640 By Gross Profit b/d 73,500 560,000 434,000 By Net Loss 1,148,140

4,200,000

917,000

4,200,000

231,140 1,148,140

Working Notes: 1. Calculations of Stock Reserve Total Break Up 75 % cloth 25% Other expenses Stock reserve @ 15% on opening stock @ 16% on closing stock (W/N 2 ) 2. Calculation of Gross Profit % opening (given) closing Gross profit / Total sales (including dept. trf.) 4200000/26250000 Opening 532,000 399,000 133,000 59,850 80,640 Closing 672,000 504,000 168,000

0.15

0.16

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Suggested Answers (Unofficial) Que 5 (B) Date Of Amount maturity 375,000 15/4/2011 490,000 6/5/2011 245,000 1/6/2011 368,000 20/6/2011 485,000 4/7/2011 Days in excess of 31/3/2011 15 36 62 81 95 Reabate @ 12% p.a. 1,849.32 5,799.45 4,993.97 9,799.89 15,147.95

Advance Accounting

i)

ii) Particlars To Profit & Loss A/c To Bal c/d Discount A/c ` Particulars 633,370 By Balance b/d By Bills Receivables 37,590 670,960 ` 60,160 610,800 670,960

iii) Sr No Journal Entries Particulars 1 Rebate on bills Dis. A/c Dr To Discount A/c (Being balance b/d) 2 Bills Receivable A/c To Cash A/c To Discount A/c (Being Bills Discounted) 3 Discount A/c To Profit & Loss A/c (Being Transfer) 4 Discount A/c To Rebate A/c (Being Balance C/f) Dr Dr 60,160 Cr 60,160

2,442,250 -

1,831,450 610,800

Dr

633,820 -

633,820

Dr

37,590 -

37,590

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Suggested Answers (Unofficial) Que 6 (A)

Advance Accounting M/s ABC Limited Statement Showing Libility of "List B Contributories"

A B C D E=B-D F

G H

I J

K L M

Particulars/ Amt due O/S Shares Max Amt Receivable @ 2/Ratio 22/7/2010 12000 BAL 15/9/2010 13500 Less: 12000 1500 BAL 14/12/2010 14000 Less: 13500 500 BAL 9/3/2011 14200 Less: 14000 200 Total Amount paid Amount Payable Unpaid Creditors

Q 3000 6000 30 4500 1500

R 2400 4800 24 3600 1200

S 1600 3200 16 2400 800

T 1000 2000 10 1500 500

Total 8000

12000

720 480

480 320

300 200

1500

308 12

192 8

500

8 14008 14200 192

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Suggested Answers (Unofficial) Que 6 (b) Form B - RA (Priscribed by IRDA) M/s. Bigfish Marine Insurance Co. Ltd. Revenue Account For the Year ended 31st March, 2011 current Schedule Year 1 1,672,800 165,250 1,838,050 2 3 4 1,200,000 194,000 375,000 49,575 1,818,575 19,475

Advance Accounting

Particulars

Pevious Year

Premiums Earned Rent,Interest & Dividend (Gross) Profit on sale of car Double Taxation Totals (A) Claims Incurred Commission paid Management Exps Income Tax paid Totals (B) Operating Profit/ (Loss)

Sch.1 Premium Earned (Net) Received Paid O/S on 31/03/2011 earned Change in provision (WN1) Net Premium Earned Sch. 2 Claims Incurred (Net) Claims Paid O/S on 31/03/2011 O/S on 01/04/2010 Exps Surveyor's Fees Legal fees

1,875,000 (228,000) 125,000 1,772,000 (99,200) 1,672,800

1,054,000 225,000 (189,000) 45000 65000

110,000 1,200,000

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Suggested Answers (Unofficial)

Advance Accounting

Sch. 3 Commission (Exps) Paid Received Sch. 4 Management Exps. Total Exps Surveyor's Fees Legal fees

194000 0

194,000

485,000 -45000 -65000 (110,000) 375,000

WN 1 Opening Balance Less: 1659500+10%

1850000 1949200 -99200

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Suggested Answers (Unofficial) Que 7 (c) Date

Advance Accounting

Books of __________ Ltd Journal Entries Particulars L/F

Dr ` 450,000 -

Cr

2010 ESO Exps A/c Dr 1-Apr To Employees' Stock Option A/c (being 5000 options @ `90each) 2010 Bank A/c Dr 1-Dec Employees' Stock Option A/c Dr to To Equity Shares A/c 2011 To Securities Premium A/c 28-Feb (Bein 4800 options @ `50 taken by employees) 2011 Employees' Stock Option A/c Dr 31-Mar To ESO Exps A/c (Being provision for unopted shares reversecd) " Profit & Loss A/c Dr To ESO Exps (Being exps for the shares opted)

450,000

240,000 432,000 -

48,000 624,000

18,000 18,000

432,000 432,000

Working Notes Provision To Be made 5000 shares * (140-50)=700000

450,000

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