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 15]

a)      Define cost of materials consumed.

b)      State two advantages of FIFO method of valuation of stock.

c)      Mention one difference between periodic method and perpetual method of valuation of inventory.

d)      What is overriding commission in consignment account?

e)      Name the basis of accounting followed in joint venture.

f)       How is entrance fees dealt with in the final accounts of non-trading organizations?

g)      What is the adjustment and closing entry required at the time of finalization of accounts for interest on capital allowed to partner assuming that accounts are maintained under fixed capital system?

h)      In the context of Garner V s Murray, name the partner who became insolvent.

i)        Give two examples of miscellaneous Expenditure appearing under Schedule VI Part I of Companies Act of 1956.

j)        Can fully paid up shares be forfeited? If so, under what circumstances?

k)      Give two examples of a consignment liability.]

l)        Mention the accounting treatment required when the incoming partner brings ‘personal goodwill’? into he the business.

m)    What is meant by the term “Verification of Assets”?

n)      State what is meant by internal check in auditing?

o)      What is meant by vouching?

                                                 PART - II

Question 2

 Albert Boris and Cyril are partners sharing profits and losses in the ratio of 3:2:1and their balance sheet as on 31^st March 1999 stood as under:                                                                   [22]

Albert died in 1^st July 1999 and the surviving partners took the following decisions. According to the partnership deed his executors were

entitled to:

a)      The deceased partner’s capital as appearing in the last balance sheet and interest thereon at 6%per annum upto the date of death.

b)      His share of profit for the period he was alive based on the figure of   31^st March 1999.

c)      Goodwill according to his share of profit to be calculated by taking twice the amount of the average profit of the last three years. The profits of the previous years were:  

                     31^st March 1999--- Rs. 11,000

                     31^st March 1998--- Rs. 15,000 and

                     31^st March 1997---Rs.10,000.

d)      Assets were to Be revalued:

                 Building--- Rs.80,000

                 Stock ------ Rs.30,000 and

                 Provision for bad debt @10%

Assuming that all the above changes are to be incorporated in the new firm and are not to be written off, prepare the Revaluation account, Partners Capital

Account and a balance sheet as on 1^st July 1999.

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

 Question 3

Dicky of Calcutta consigned 200 drums of oil (cost price Rs.10, 000)at a proforma invoice price of 20% profit on sales to his agent Simpson of

Delhi. On the same date, Dicky incurred non-recurring expenses of

Rs.2000.

During transit, 10 drums were damaged due to bad handling and insurance claim of Rs.300 was accepted.

Consignee took delivery of the rest and incurred direct expenses of Rs. 1,225 and indirect expenses of Rs.250.

5 drums were lost due to leakage and evaporation which is considered as normal.

Simpson sold 150 drums for Rs. 15,000. He was entitled to a commission of 15% on the sales price in excess of invoice price.

You are required to prepare the consignment account, stock on consignment account, consignment stock reserve account and abnormal account. Also show how the consignment stock account will finally appear in balance sheet.

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

Question 4.

 Given below are the receipts and payments account and income and expenditure account of Downtown Club:

Receipts and Payments account of Downtown Club for the year ended

31^st December 1999.

Income and Expenditure account of Downtown club

              for the year ended 31^st December, 1999 

Additional Information:

a.       The club owns a building worth Rs.1, 00,000.

b.       Subscription accrued in 1998- Rs. 1,200.

c.       Entrance fees are a part of capital fund.

d.       Repairs outstanding in 1998-Rs. 150.

From the above prepare the opening and the closing balance sheet of the Club.

Question 5.

From the following information, prepare the profit and loss appropriation account of Crispin Ltd. For the year ended 31^ST march 1999: -                                                                  [12]

     Balance brought forward from last year –Rs.1,00,000 (Credit)

     Current year’s profit after all necessary adjustments-Rs. 4,60,000

 The board Of Directors at the annual general Meeting approved the following appropriations: -

a.       Provide 15%dividend on equity shares.

b.       Provision for taxation –Rs.15,000.

c.       Dividend equalisation Fund- Rs.21,000.

d.       Transfer of debenture redemption reserve –Rs.18,000

e.       Rs. 20,000 to be transferred to Reserve Fund.

f.        Sinking Fund –Rs.13,000

       The capital structure of a company consisted of:

                                 i.            1000 equity shares of Rs.10 each fully called up (calls in arrears Rs.10,000)

                               ii.            5,000,12% cumulative preference share of Rs. 100 each fully called up.

                              iii.            6,000, 13% convertible debentures of Rs. 1000 each.

Question 6.

 The following cost sheet has been prepared by an inexperienced accountant of Thesaurus Manufacturing Co. Ltd. for the month ending 31st December,1999:-

Cost sheet

You are required to re-draft the above cost sheet properly.

Question -7

a.       Winston was allotted 100 shares of Rs. 100 each by Diplod Ltd. originally issued at a discount of 6% per share. He failed to pay final call of Rs.35. These shares were forfeited and out of these , 50 shares were re-issued to Slack at Rs.90 each as fully paid up.

Journalise the transactions in respect of forfeiture and re-issue of shares only.         [6]                                                                                               

 (b) The following information relates to the acquisition of material 2XA by Ringers Ltd. For the year ended 31st December 1999: -

Date                                   Acquisition                          Price per ton (Rs.)

11-1-99                                    200                                     700

28-3-99                                      50                                     800

15-7-99                                    105                                     750

20-10-99                                    60                                     900

10-12-99                                  225                                     850

NOTE: -

(i)                  There were 140 tons in stock valued at Rs. 650 per ton as on 31st   December 1998 

(ii)                On  31^st December 1999,physical examination of stock reflects 600 tons in hand.

       Assuming a periodic inventory method to be in operation, you are required to calculate the closing stock value of material 2xa based on the FIFO method of valuation of inventory.

Question 8

(a) Alec and Ben are in partnership as bakers, sharing profits and losses in the ratio of 3:2 respectively. Their balance sheet on 31st December 1999 was: -                     [5]

On 1^st January 2000,the partners agreed that as Alec wished to take a smaller part in the partnership business, the profit sharing ratio should change to 2:3 respectively with a salary of Rs. 10,000 a year to Alec. For the purpose of the change only, they did not however want to alter the book  values of goodwill and reserves but record the change by passing one single journal entry.

You are required to show that single journal entry as on 1^st January,2000.

(b) Andrew and Martin into a joint venture for the purchase and sale of second hand machines and to share profits and losses in the ratio 0f 3:2

        Andrew contributed Rs. 2,00,000 for the purchase of machines and Martin paid wages amounting to Rs. 7,000 and Rs. 12,000 respectively.

       Martin also bought machines amounting to Rs. 1,50,000. One machine was taken over by Andrew for Rs.25, 000. The rest of the machines were sold by Martin for Rs. 5,00,000.

 You are required to show the joint venture account and Martin’s account in the books of Andrews only.