ISC - 1999.............................. (Three hours)

Answer Question 1 (compulsory) from part 1 and Question 2 (compulsory) 

and any other four questions from Part II.

The intended marks for questions or parts of questions are given in brackets [ ]

Transactions should be recorded in the proper forms of accounts.

All calculations should be shown clearly.      

All working, including rough work, should be done on the same sheet  as, and adjacent to, 

the rest of the answer.­­­­­­­­­­­

PART - I

Question - 1

Answer the following questions very briefly and to the point:                            [2 x 10]

      i.        State two differences between Consignment & Joint venture.

     ii.        In what way would you deal with rent paid to partner for he use of his premises by the firm in which he is a partner and why?

   iii.        Mention two uses of a cost sheet.

   iv.        Give any two differences between calls in arrear and calls in advance.

    v.        When and how is a receipts and payments account prepared?

   vi.        When calculating the due date of a bill of exchange leading to the determination of average due date, what is the difference between a bill drawn at sight and a bill drawn after a due date by the drawer?

 vii.        Explain the term STOCK\INVENTORY for the purpose of valuation.

        Give one example.

viii.        State the 2 types of business organizations that can keep their books of accounts under the single entry system.

   ix.        State two ways in which a partnership firm is similar to that of a joint venture.

    x.        Explain the principle of GARNER Vs MURRAY. 

 Question - 2

From the following particulars and the notes given relating to the Country Club, prepare the Final Accounts of the Club for the year ending 31-3-1997:                 [26]                                 

Receipts and Payments A/c

On 1st April1, 1996, The Club owed a Club House costing Rs. 90,000, equipment valued at Rs. 7,500, a mower valued at Rs. 900. The Club owed dance expenses Rs.1, 170 and secretarial expenses 

Rs.750. Subscriptions in arrear were Rs.1, 050 and received in advance Rs.600.

On 31^st March 1997, in addition to the club House, equipment was valued at Rs. 10,500. The Club owed

Dance expenses rs.600 and Secretarial expenses Rs.1, 350.  Subscriptions outstanding were rs.750 and received in advance Rs.1, 500.

 Question - 3.

 A drew on B the following bills for goods sold as per terms:

B drew on A the following bills for goods sold as per terms:

Consolidate the above bills and calculate the Average Due Date on which a single payment can be made or received without loss of interest on either side.

Question - 4

Mr. C maintains his books according to the single entry system. The following figure were available from the books for the six months ended 31st December,1998:-                                             [18]

Adjustments

a)      He has withdrawn Rs.200 at the beginning of every month for household purpose.

b)      Depreciation on plant and machinery @10% p.a.

c)      Further bad debts Rs. 5,000 and provision for bad debt and doubtful debts to be created @ 2%.

d)      During the period, salaries had been prepared by Rs. 500 while wages outstanding was Rs.1,000.

e)      Interest on drawing to be reckoned @ 6 % p.a.

        You are required to prepare a statement of profit and loss for the half year ended 31st December,1998:- followed by a revised statement of affairs as on that date.

The manufacturer sells the product so as to reflect a profit of 20% on sales.

Question - 6

(a) X, YandZ are in partnership with capital of Rs. 1,20,000 (Credit), Rs1, 00,000(Credit) and Rs 8,000(Debit) respectively on 1st April 1997.                                                                    [9]

  Their partnership deed provides the following:

      i.        Partners are to be only allowed interest on capital @ 5% p.a. and are to be charged interest on drawings @6% p.a.

     ii.        X is entitled to a remuneration of 10% of the net profit for securing contacts with customers.

   iii.        Y is also entitled to a commission of 10% of the net profit after charging clause (ii) above.

   iv.        Z is entitled to a rent of Rs. 1000 per month for the use of his premises by firm.

During the year, x withdrew Rs.200 at the beginning of every month, y Rs.300 during the month and z Rs. 400 at the end of every month.

 The net profit for the firm for the year ended 31^st march, 1998,before providing for any of the above clauses was Rs.1, 11,000.

From the above you are required to draft only the profit and loss appropriation account for the year ended 31^st March 1998

          (All calculations to be made to the nearest rupee.)

(b) D & Company Ltd. Does not maintain continuous stock records but rather values stock at the end of every month based on physical verification.                                              [9]

Their books of account during the month of January 1999 reflect the following:

1^st January, 1999----- Stock in hand 50 units @Rs.10 per unit

10^th January,1999  ---- Acquisitions 75 units @Rs.11 per unit.

15th January,1999----- Acquisitions 60 units @Rs.10 per unit.

25th January,1999--- Acquisitions 80 units @Rs.12 per unit.

On 31^st January 1999, physical examination of stock reflects 250 units in hand.

Examine the effect on gross profit using the FIFO and LIFO methods of valuations of inventory.

Question 7

PQR &Company Ltd. with an authorized capital of Rs.100, 000 equity shares of Rs.10 each made a public issue of 80,000 equity shares at a premium of Rs.3 per share payable Rs.2 on application, Rs. 5 on allotment (including premium), Rs.3 on first call and the balance after some time.                                                                                        [18]

    Applications were received for Rs.100000 shares. The Board of Directors decided to refund the excess application money and thereafter allot the remaining shares.

       During allotment, Mr. M holding 2000 shares paid the entire amount due upto the second and final call.

   Thereafter, the first call was made and after giving sufficient notice to Mr. M, the company decided to forfeit his shares and subsequently re-issued 800 of the forfeited shares to Mr. O at Rs. 11 each fully paid up at Rs.13 each.

   You are required to journalize the above issue of shares through calls in arrear account and calls in advance account along with other entries in the books of PQR& Company Ltd.

Question - 8

A, B, C and D were partners in a firm. Their balance sheet on the date of dissolution was as follows:                                                                                                 [18]

C Is insolvent and cannot contribute anything. Show the partners capital accounts assuming:

a)      Garner Vs Murray is applicable.

b)      Garner Vs Murray is not applicable.

                 (All calculations are to be made to the nearest rupee)

Question - 9

(a)    S, T and W having agreed to share profits and losses equally, entered into a joint venture to construct a multi-storied commercial complex for a multi-national at a contract price of Rs. 10,00,000, payable Rs. 8,00,000 in cash and the balance in shares of the company.

A joint bank account was thus opened where S paid Rs. 4,00,000, T Rs. 2,00,000,and W Rs. 3,00,000.

Expenses incurred on behalf of the joint venture were as follows:

        Materials      - Rs. 2,00,000

        Wages         - Rs. 1,50,000

        Expenses    - Rs. 1,25,000

 Materials supplied by S from his stock amounted to Rs. 1,25,000.

Finally, the venture was closed by taking the closing stock at a valuation Of Rs.1,00,000        and W taking up the shares at Rs.1, 74,000.

From the above, you are required to prepare the joint venture account and the shares   

            account only.

(b)    ( i ) E and F are partners sharing profits and losses in the ratio of 4:1 respectively. G is  

admitted as a partner for which he pays Rs. 10,000 as premium for goodwill and in future E, F and G decide to share profits and losses in the ratio of  2 : 1 : 1  respectively.

           You are required to pass a single journal entry to give effect to the above arrangement.

(ii) j and R are partners . V is admitted as a partner for ¼ share of profit but is unable to contribute premium for goodwill in cash amounting to Rs. 8,000 and so it is decided to raise a loan amount in the name of V.

 You are required to pass a single journal entry in order to give effect to the above problem.