1
SYLLABUS
B.COM. - II YEAR
ADVANCED ACCOUNTING
UNIT – I: Accounts from Incomplete Records - Hire purchase and installment
purchase system.
Single Entry: Features – books and accounts maintained- Recording of
transactions -Ascertainment of Profit. –( Statement of Affairs method only).
Hire Purchase System - Features –- Accounting Treatment in the Books of Hire
Purchaser and Hire Vendor - Default and Repossession - Installment Purchase
System - Difference between Hire purchase and Installment purchase systems Accounting Treatment in the books of Purchaser and Vendor
UNIT-II : Branch and Departmental Accounts:
Dependent Branches: features-Books of accounts- methods of accounting of
dependent branches - Debtors System, Stock and debtors system -– Recording of
transaction relating to branch accounts using computers.
Departmental Accounts: need, features, Basis for Allocation of Expenses,
treatment of Inter - Departmental Transfer at cost or Selling Price-Treatment of
Expenses that cannot be allocated – Preparation of departmental profit and loss.
UNIT-III : Accounting of Non-Profit Organizations:
Non-Profit entities-Features of non-profit entities – Accounting processPreparation of summaries -Receipts and Payments Account meaning and special
features-Procedure for preparation-uses and limitations.
Income and Expenditure Account- features- procedure for preparationpreparation of Balance Sheet
UNIT - IV : Partnership Accounts:
Legal provisions in the absence of Partnership Deed - Fixed and
Fluctuating Capitals –Preparation of final accounts. – Accounting Treatment of
Goodwill and Admission of a partner.
Accounting treatment of Retirement and Death of a Partner - Dissolution of
Firm (Excluding Sale to Firm, Company and Amalgamation) – Recording of partnership
transaction and preparation of final accounts using computers. (24 hours)
UNIT-V : Company Accounts:
Issue of Shares at par, Premium and at Discount - Forfeiture and
Reissue of Shares-Rights issue (Theory Only) - Recording of transactions relating to
issue of shares using computers.
Issue and Redemption of Debentures - Redemption out of profits –sinking fund
method. Recording of transaction relating to issue and redemption of debentures using
computers
Underwriting of Issue of Shares(Simple Problems)
2
SVU(AA2EM) – MARCH/APRIL 2014
3
SRI VENKATESWARA UNIVERSITY
II B.COM, DEGREE EXAMINATION, MARCH/APRIL 2014
Paper lI : (354) ADVANCED ACCOUNTING
Time : 3 Hours]
[Max. Marks : 70
SECTION – A (5 × 2 = 10 Marks)
Answer any FIVE questions.
1. a) Short workings.
b) Hire Purchase System.
c) Dependent Branches.
d) Statement of Affairs.
e) Life Membership Fees.
f) Fixed Capital Method.
g) Dissolution of firm.
h) Forfeiture of shares.
i) Redemption of Debentures.
j) Income and Expenditure Account.
SECTION – B (5  12 = 60 Marks)
Answer ONE question from each Unit.
Each question carries 12 Marks
UNIT - I
2. 'X' Ltd took a mine on lease from 'Y' at a given rate of royalty with a
minimum rent of Rs.10,000 a year. Each years's excess of minimum rent over
royalty is recoverable out of the next year only. In the event of a strike and the
minimum rent not being reached, it was provided that the actual royalties earned
for the year would be the full royalty obligation for the year.
The results of the working were as follows :
Actual Royalties
First year
Nil
Second year
8,000
Third year
8,000
Fourth year
9,000
Give Journal entries and draw up Minimum Rent Account, short working
account and Royalties Account for all the years in the books of 'X' Ltd.
3. Krishna purchases a motor cycle on hire-purchase system. the total cash
price of the motor cycle is Rs.15,980; payable Rs.4,000 as down payment and
three further installments of Rs.6,000; Rs.5,000; Rs. 2,000 payable at the end of
first, second and third year respectively. Interest is charged at 5% per annum.
Prepare necessary Journal entries and ledger A/c's in the books of Krishana.
UNIT - II
4. Madras Head Office has a branch at Kakinada to which goods are
invoiced at cost plus 20 percent. From the following particular prepare the Branch
Account in the Head Office Books.
Rs.
Goods sent to branch
2,11,872
Total sales
2,06,400
Cash sales
1,10,400
Cash received fro branch debtors
88,000
SVU(AA2EM) – MARCH/APRIL 2014
4
Branch debtors at the beginning
24,000
Branch stock at the beginning
7,680
Branch stock at the End
13,440
5. Mr. Unlucky filed his petition on 31.12.2013 his statement of Affairs was
made of the following figures :
Rs.
Creditors fully secured by lien on stock
200
Creditors partly secured by lien on shares
80,000
Creditors un-secured
1,50,000
Mortgage on building
20,000
Creditors payable in full
6,000
Liability on bills receivable (estimated to rank Rs.7,000)
14,000
Bills of exchange
2,800
Value of building
22,000
Machinery (estimated to realize Rs.24,000)
30,000
Furniture and fixtures (estimated to realize Rs.3,000)
6,000
Book debts good
40,000
Book debts doubtful and bad (estimated to produce Rs.4,000)
20,000
consignments (realizable value)
10,000
Stock (estimated to realize Rs.80,000)
1,20,000
Share (cost and estimated to realize)
32,000
Sundry-Assets (estimated to realize Rs.6,000)
7,000
Cash
200
On 1.1.2008 six year ago, Mr. Unlucky has a capital of Rs.1,00,000. From
2008 to 2013 he made a profit of Rs.41,000 after allowing interest on capital of
Rs.20,000 and withdraws amounting to Rs.1,27,200. Prepare the statement of
Affairs and Deficiency Account.
UNIT - III
6. Receipts and payments of Medical Aid Society is given below:
Receipts and Payments Account for the year ended 31.12.2006
Receipts
Rs.
Payments
Rs.
To Balance b/d
7,000 By Payments for medicine 30,000
To Subscriptions
50,000 By Honorarium to Doctors 10,000
To Donations
14,500 By Salaries
27,500
To Interest on investments @ 7% p.a 7,000 By Sundry expenses
500
To Charity show proceeds
10,000 By Equipment purchased 15,000
By Charity show expenses 1,000
By Balance c/d
4,500
88,500
88,500
Additional Information :
1.1.2006 31.12.2006
Subscriptions due
500
1,000
Subscriptions received in advance
1,000
500
Stock of Medicines
10,000
15,000
Amount due to medicine suppliers
8,000
12,000
SVU(AAEM) – SEPTEMBER 2010
e)
113
Loss on Redemption of Debentures A/c
Dr
To 6% Debenture A/c
To Premium A/c
(Being Repayable at Premium at 10%)
Bank A/c
Dr
Discount on issue of Debentures A/c
Dr
Loss on Redemption of Debentures A/c
To 6% Debentures A/c
To Premium A/c
(Being issued at discount and Repayable at Premium)
At the time of Redemption :a) 6% Debentures A/c
To Bank A/c
(Being Debentures Redeemed at par)
b) 6% Debentures A/c
To Bank A/c
(Being Repayable at par)
c) 6% Debentures A/c
To Bank A/c
(Being repayable at par)
d) 6% Debentures A/c
Loss on redemption of Debentures A/c
To Bank
(Being debentures repaid at Premium)
e) 6% Debentures A/c
Loss on Redemption of Debentures A/c
To Bank A/c
(Being Debenture Repayable at Premium)
40,000
3,80,000
20,000
20,000
Dr
4,00,000
Dr
4,00,000
Dr
4,00,000
Dr
Dr
4,00,000
40,000
Dr
Dr
4,00,000
20,000
4,00,000
40,000
4,00,000
20,000
4,00,000
4,00,000
4,00,000
4,40,000
4,20,000
SVU(AAEM) – SEPTEMBER 2010
112
10.
Journal Entries
Date
Particulars
LF Debit
Credit
1) Bank A/c (45,0004)
Dr
1,80,000
To Share Application A/c
1,80,000
(Being Application Money Received)
2) Share Application A/c
Dr
1,80,000
To Share Capital A/c
1,80,000
(Being Application Money Transferred to Share Capital)
3) Share Allotment A/c
Dr
3,60,000
To Share Capital A/c
2,70,000
To Share Premium A/c
90,000
(Being Share Allotment Money Due)
4) Bank A/c
Dr
3,58,000
Calls-in-Arrears A/c( 2508)
Dr
2,000
To Share Allotment A/c
3,60,000
(Being Allotment Money Received)
5) Share First Call A/c
Dr
4,50,000
To Share Capital A/c
4,50,000
(Being First Call Money Due)
6) Bank A/c
Dr
4,47,500
Calls-in-Arrears A/c
Dr
2,500
To Share First Call A/c
4,50,000
(Being First Call money Received)
7) Share Capital A/c (25020)
Dr
5,000
Share Premium A/c
Dr
500
To Calls-in-Arrears A/c
4,500
To Share Forfeited A/c
1,000
(Being 250 Shares forfeited)
8) Bank A/c
Dr
3,750
Share forfeited A/c
Dr
1,250
To Share Capital
5,000
(Being Forfeited Shares Reissued)
Balance Sheet
Liabilities
Rs.
Assets
Rs.
Registered Capital:
Cash / Bank
9,89,250
60000 E. Shares of Rs.20 each 12,00,000 Capital Loss
Issued Capital :
(on Reissue) (1,250 – 1,000)
250
50,000 E. Shares @20
10,00,000
Calledup & Paid up Capital:
4,50,000 Shares @20 each
9,00,000
Share Premium
89,500
9,89,500
9,89,500
11. Debenture debt capital = No. of Debentures  Value per Debentures.
= 4,000  100 = 4,00,000
Journal Entries
Date
Particulars
LF Debit
Credit
At the time of Issue :
a) Bank A/c
Dr
4,00,000
To 6% Debentures A/c
4,00,000
(Being Debentures Issued at Par)
b) Bank A/c
Dr
4,20,000
To 6% Debenture A/c
4,00,000
To Premium A/c
20,000
(Being Debentures issued at Premium)
c) Bank A/c
Dr
3,60,000
Discount A/c
Dr
40,000
To 6% Debentures A/c
4,00,000
(Being Debentures issued at Discount)
d) Bank A/c
Dr
4,00,000
SVU(AA2EM) – MARCH/APRIL 2014
5
Value of equipments
21,000
30,000
Value of buildings
40,000
38,000
You are required to prepare income and expenditure account for the year
ended 31.12.2006 and the Balance Sheet as on that date.
7. Ram Prakash keeps his books by the Single Entry Method. His position on
31.12.2007 was as follows :
Cash in hand Rs.200; Cash at Bank Rs.3,000; Stock in trade Rs.20,000;
Sundry Debtors. Rs. 8,500; Fixtures and fittings Rs.1,800; plant and Machinery
Rs. 15,000; Sundry creditors Rs. 22,000 During the year Ram Prakash introduced
Rs.5,000 as further capital in the business and withdrew Rs.750 per month.
On 31.12.2008 his position was as follows :
Cash in hand Rs.300; Cash at Bank Rs.2,000; Sundry Debtors Rs. 14,000;
Stock in trade Rs.19,000; Plant and Machinery RS. 27,000; Fixtures and fittings
Rs.1,500; Sundry Creditors Rs.29,000.
From the above, prepare as statement showing the profit or loss made by him for
the year ended 31.12.2008.
UNIT - IV
8. The Balance sheet of Appu and Pappu as on 31.12.2009 is set out below :
They share profits and losses in the ratio of 2 : 1.
Liabilities
Rs
Assets
Rs
Appu's capital
40,000 Freehold property
20,000
Pappu's capital
30,000 Furniture
6,000
General Reserve
24,000 Stock
12,000
Creditors
16,000 Debtors
60,000
Cash
12,000
1,10,000
1,10,000
They agreed to admit Kappu into the firm subject to the following terms
and conditions :
a) Kappu will bring in Rs.21,000 out of which Rs.9,000 will be treated as his
share of Goodwill to be retained in the business.
b) He will be entitled to one-fourth share of the profits.
c) 50% of the General Reserve is to remain as Reserve for Bad and Doubtful
debts.
d) Depreciation is to be provided on furniture @ 5%
e) Stock is to be revalued at Rs.10,500.
Give Journal entries to give effect to these arrangements and construct
the Balance Sheet of the new firm.
9. Manoj and Sunil are partners sharing profits and losses equally. On
30.6.2013 they decided to dissolve the partnership. On that day their state of
affairs was as follows :
Balance Sheet
Liabilities
Rs.
Assets
Rs.
Sundry Creditors 28,000 Cash in hand
600
Manoj capital
3,000 Sundry debtors
4,400
Stock
13,000
SVU(AA2EM) – MARCH/APRIL 2014
6
2,000
8,200
2,800
31,000
31,000
The assets realized Rs.18,400 and realization expenses amounted to
Rs.600. Close the books of the firm. The private assets of both partners are
inadequate to meet their respective private debts and hence are not available to
the firm.
UNIT - V
10. Vivek Ltd offered 1,00,000 equity shares of the nominal value Rs.100
issues with premium Rs.20 per share. The amount payable on the shares were
on application Rs.45, on allotment including premium Rs.45; on first and final call
Rs.30.
Applications were received for 90,000 shares only. All money payable by
shareholders was received expect from Sudhakar who has taken 1,000 shares but
failed to pay the final call. His shares were forfeited and re-issued to Prabhakar at
Rs.80 each. Write the Journal Entries in the books of the company.
11. Raj Ltd. issued 2,000 equity shares of Rs.100 each payable as follows :
Rs.20 on application; Rs.30 on allotment Rs.20 on first call and Rs.30 on final call.
1,500 shares were applied for and allotted. All money were received with the
exception of first and final call on 50 shares. These shares were received with the
exception of first and final call on 50 shares. These shares were forfeited and
reissued at 70 per share. Give Journal Entries to record the above transactions.
SVU(AAEM) – SEPTEMBER 2010
Jayaram
Hareram
Creditors
Bills Payable
Furniture and fittings
Plant and Machinery
Sunil's deficiency
SOLUTIONS – SVU (AA2 EM) – MARCH/APRIL 2014
SECTION – A
1. a) Refer Q.No.50, Page No.35
b) Refer Q.No.7, Page No.5
c) Refer Q.No.57, Page No.40
d) Refer Q.No.77, Page No.47
e) Refer Q.No.14, Page No.12
f) Refer Q.No.96, Page No.53
g) Refer Q.No.98, Page No.53
h) Refer Q.No.108 page No.56
i) Redemption of debenture refers to the discharge of liability on account of
debentures. The major sources where from debentures can be redeemed may be
(1) out of profits (2) out of capital (3) out of provisions made for redemption and (4)
by converting them into shares or new debentures.
j) Refer Q.No.83Page No.49
SECTION – B : UNIT - I
2.
Analytical Table
Year Royalties Minimum Short
S.w
S.w Not Payments
Rent Working Recouped
Recouped
(Profit&Loss A/c
1
Nil
10,000 10,000
--10,000
1,707.5
(-) Bad debts
1,000.0 4,915
1,000 (-) RBDD
1,000 Stock
Furniture
(-) Depreciation
Machinery
(-) Depreciation
Goodwill
Investments
6,915
111
200
1,300
45 1,235
1,400
400
20 380
1,000
100 900
1,000
400
6,915
9.
Average Profit
Last 3 Years Profit 10,500  12,000  9,003

3
3
31,500

 10,500
3

Goodwill = Average Profit  2 Years Purchase
 Goodwill = 10,500  2 = 21,000
 Sharma Share = 21,0001/4 = 5,250
Sharma Share of Profit upto date of death = 10,500  3/12  ¼ = 656.25 (or) 656.
Interest on Capital = 7,500  5/100  3/12 = 93.75 (or) 94
Journal Entries
Date
Particulars
LF Debit
Credit
1) Profit & Loss Suspense A/c
Dr
656
To Sharma Capital A/c
656
(Being Sharma Share of profit)
2) Profit & Loss Suspense A/c
Dr
94
To Sharma Capital A/c
94
(Being interest on Capital Provided)
3) Rao Capital A/c
Dr
3,500
Murthy Capital A/c
Dr
1,750
To Sharma Capital A/c
5,250
(Being Share in Goodwill)
4) Reserve fund A/c
Dr
4,800
To Rao Capital
2,400
To Murthy Capital
1,200
To Sharma Capital
1,200
(Being Reserve Distributed)
5) Sharma Capital A/c
Dr
14,700
To Sharma Executors A/c
14,700
(Being Sharma Capital Transfer to Executors A/c)
Dr
Sharma Capital A/c
Rs.
Particulars
14,700 By Balance b/d
By Profit & Loss Suspense
By Profit & Loss Suspense A/c
By Rao & Murthy Capital
By Reserve Fund
14,700
 Amount Payable to Sharma's Executors Rs.14,700
Particulars
To Sharma Executors A/c
Cr
Rs.
7,500
656
94
5,250
1,200
14,700
SVU(AAEM) – SEPTEMBER 2010
Capital
110
22,990
(-) Bad debts
(-) RBDD
Cash in Hand
Bills Receivable
Furniture
(-) Depreciation
Motor Van
(-) Depreciation
Plant
(-) Depreciation
500
5,800
290
2,200
220
6,000
1,500
15,000
3,000
35,890
Statement Showing Profit / Loss
Particulars
Rs. Rs.
Capital as on 31.12.09
22,990
Add: Interest on Capital :
1,618
32,3505/100
75 1,693
3,0005/1006/12
Drawings (45012) 5,400
Interest
500 5,900 7,593
30,583
(-) Additional Capital
3,000
27,583
(-) Opening Capital
32,350
4,767
 Loss
5,510
300
1,600
1,980
4,500
12,000
35,890
8.
Dr
Particulars
To Bad debts
To R.B.D.D(1,3005/100)
To Depreciation :
On Furniture
On Machinery
To Sreeram
To Jayaram
Dr
Particulars
To Balance c/d
Revaluation A/c
Rs.
Particulars
200 By Investments
65
7.5
7.5
20
100
15
400
Capital A/c
Sreeram Jayaram
Particulars
2207.5
1707.5 By Balance b/d
By Goodwill
By Reserve
By Revaluation A/c
2,207.5
1,707.5
Liabilities
Capitals:
Sreeram
Cr
Rs.
400
400
Cr
Sreeram Jayaram
1,500
1,000.0
500
500.0
200
200.0
7.5
7.5
2,207.5
1,707.5
Balance Sheet
Rs.
Assets
Rs.
Cash (1,000+600)
1,600
2,207.5
Debtors
1,500
SVU(AA2EM) – MARCH/APRIL 2014
7
2
8,000 10,000
2,000
-10,000
10,000
3
8,000 10,000
2,000
-2,000
10,000
4
9,000 10,000
1,000
-2,000
10,000
Journal Entries in the books of X Ltd
Year
Particulars
Debit Credit
1 Minimum Rent A/c
Dr 10,000
To Y A/c
10,000
(Being Minimum rent payable)
Royalty A/c
Dr -Short workings A/c
Dr 10,000
To Minimum Rent A/c
10,000
(Benign Royalty and short working transfer to
minimum Rent A/c)
Y A/c
Dr 10,000
To Cash A/c
10,000
(Being the amount paid to Y)
2 Minimum Rent A/c
Dr 10,000
To Y A/c
10,000
(Being Minimum Rent Payable)
Royalty A/c
Dr 8,000
Short working A/c
Dr 2,000
To Minimum Rent A/c
10,000
(Being Royalty and Short workings account
transferred to minimum Rent A/c)
Y A/c
Dr 10,000
To Cash A/c
10,000
(Being the amount paid to Y)
Trading A/c
Dr 8,000
To Royalty A/c
8,000
(Being Royals account transferred to profit and Loss A/c)
Profit & Loss A/c
Dr 10,000
To Short working A/c
10,000
(Being Unrecouped short working transfer to
profit & Loss A/c)
3 Minimum Rent A/c
Dr 10,000
To Y A/c
10,000
(Being minimum Rent payable)
Royals A/c
Dr 8,000
Short workings A/c
Dr 2,000
To Minimum Rent A/c
10,000
(Being Royalty, short workings account
Transfer to Minimum Rent)
Y A/c
Dr 10,000
To To cash A/c
10,000
SVU(AA2EM) – MARCH/APRIL 2014
8
(Being the amount paid to Y)
Trading A/c
Dr 8,000
To Royalty A/c
8,000
(Being Royalty account transfer to Trading A/c)
Profit and Loss A/c
Dr 2,000
To Short workings A/c
2,000
(Being Unrecouped short working transfer to
Profit and Loss Account)
4 Minimum Rent A/c
Dr 10,000
To Y A/c
10,000
(Being Minimum Rent payable)
Royalty A/c
Dr 9,000
Short workings A/c
Dr 1,000
To Minimum Rent A/c
10,000
(Being Royalty and short working A/c
transferred to minimum Rent A/c)
Y A/c
Dr 10,000
To Cash A/c
10,000
(Being amount paid to Y A/c)
Trading A/c
Dr 9,000
To Royalty A/c
9,000
(Being Royalty account transferred to Treading A/c)
Profit and Loss A/c
Dr 2,000
To Short working A/c
2,000
(Being short workings A/c transferred to profit
and Loss A/c)
Dr
Year Particulars
1 To Y A/c
2
To Y A/c
3
To Y A/c
4
To Y A/c
Dr
Year
Particulars
Minimum Rent A/c
Rs.
Year
Particulars
10,000 1 By Royalty A/c
By Short workings
10,000
10,000 2 By Royalty A/c
By Short working A/c
10,000
10,000 3 By Royalty A/c
By Short working
10,000
10,000 4 By Royalty A/c
By Short working A/c
10,000
Short Workings A/c
Rs. Year
Particulars
Cr
Rs.
-10,000
10,000
8,000
2,000
10,000
8,000
2,000
10,000
9,000
1,000
10,000
Cr
Rs.
SVU(AAEM) – SEPTEMBER 2010
109
Calculation of Capital Fund Balance Sheet as on 1.1.09
Liabilities
Rs.
Asset
Rs.
Outstanding Expenses
300 Cash
1,500
Capital Fund
2,400 Furniture
200
Outstanding Subscriptions 1,000
2,700
2,700
Dr
Expenses
To Salaries
(+) Outstanding
To Office Expenses
(-) Last Year
(-) Next Year
To P & S
To Insurance
(-) Prepaid
To Advertisement
To Wages
To Other Expenses
Income and Expenses A/c
Rs.
Income
12,000
By Subscription
2,500 14,500 (-) In Advance
3,500
300
(-) For 2008
3,200
200 3,000 (+) for 2009
2,500 By Legacies
500
By Sale of Magazines
200
300 By Profit on Sale of Furniture
2,000 By Other Receipts
8,000 By Deficiency
1,000
31,300
Cr
Rs.
21,000
500
20,500
1,000
19,500
1,500 21,000
2,500
500
100
1,700
5,500
31,300
Balance Sheet as on 31.12.09
Rs.
Assets
Capital Fund
2,400
Investments
Legacies
2,500
Cash Balance
Tournament fund(2000-1500)
500
Outstanding Subscription
5,400
Prepaid Insurance
Donation for Construction of Building 15,000
Prepaid Office Expenses
20,400
(-) Deficiency
5,500 14,900
Subscription Received in Adv.
500
Outstanding Salaries
2,500
17,900
7.
Statement of Affairs as on 31.12.08
Liabilities
Rs.
Assets
Rs.
Creditors
6,000 Stock
12,700
Bank Overdraft
7,500 Debtors
6,700
Capital (b/f)
32,350 Cash in hand
250
Bills Receivable
3,000
Furniture
2,200
Motor Van
6,000
Plant
15,000
45,850
45,850
Liabilities
Statement of Affairs as on 31.12.09
Particulars
Rs.
Particulars
Creditors
8,100 Stock
Bank Overdraft
4,800 Debtors
6,300
Rs.
10,000
Rs.
11,000
5,000
1,500
200
200
17,900
SVU(AAEM) – SEPTEMBER 2010
108
UNIT – II
4.
Dr
Chennai Branch A/c (in H.O. Books)
Particulars
Rs.
Particulars
To Branch Stock A/c
1,800 By Cash :
To Branch Debtors A/c
3,000
Cash Sales
To Petty Cash A/c
30
from Debtors
To Goods sent to branch
30,000 By Branch Stock
To Cash (for Expenses)
By Branch Debtors
Salaries
900
By Branch Petty Cash
Rent & Tax
150
By Stock Reserve (1,80020/120)
Petty Cash
110
1,160 By Goods Sent to branch
To General P & L A/c
3,630
Reserve (30,00020/120)
5,14,800
5.
Statement of Affairs
Book
Value
Particulars
56,300 Unsecured Creditors as per List 'A':
--- Fully Secured Creditors as per List
'B':
--- Partly Secured Creditors as per list
'C'
Preferential Creditors as per List 'D'
1,200 Creditors
1,200
(-) Deduction as per contra
1,200
Estimated
to Rank
Cr
Rs.
6,000
21,000
27,000
3,000
4,800
20
300
Book Estimated
Value
to
produce
Particulars
56,300 Property as per List 'E':
--- Book debts as per List F
}
--- Bills of Exchange as per list
G
56,000 14,000
56,000
(-) Deduction as per Contra
--48,800
Deficiency Account
Particulars
Rs.
Particulars
Capital (56,000 – 44,000) 12,000 Loss on Assets (56,000 – 14,000)
Deficiency as per
Liability on bills discounted
Statement of Affairs 36,000 Loss due to Expenses :
Rent
Wages
Salaries
Rates & Taxes
Loan from friend
48,000
Working Notes :
1) Assets Realised = Liability – Deficiency
= 44,000 - 30,000 = 14,000
2) Preferential Creditors = Wages + Salaries + Rates & Taxes
= 300 + 700 + 200 = 1,200
3) Unsecured Creditors :Contingent Liability on b/d =
2,500
Rent
=
300
Loan from friend
=
2,000
Liabilities
= 44,000
48,800
6.
2.
To Balance b/d
To Minimum Rent
3.
To Balance b/d
To Minimum Rent
4.
To Balance
To Minimum Rent
5.
To Balance b/d
5,000
5,14,800
Deficiency as per list H
57,500
SVU(AA2EM) – MARCH/APRIL 2014
1. To Minimum Rent
10,000
14,000
1,200
12,800
36,000
48,800
Dr
Year
Particulars
1 To Minimum Rent
2 To Minimum Rent
3.
4.
3.
Rs.
42,000
2,500
300
300
700
200 1,500
2,000
48,000
Year
beg.
10,000
10,000
2,000
12,000
2,000
2,000
4,000
2,000
1,000
3,000
1,000
1
By Balance c/d
2
By Profit & Loss A/c
By Balance c/d
3
By Profit & Loss A/c
By Balance c/d
4
By Profit & Loss A/c
By Balance c/d
9
10,000
10,000
10,000
10,000
2,000
12,000
2,000
2,000
2,000
2,000
1,000
3,000
Royalty A/c
Cr
Rs.
Year
Particulars
Rs.
-1 By Trading A/c
-8,000 2 By Trading A/c
8,000
8,000
8,000
To Minimum Rent
8,000 3 By Trading A/c
8,000
8,000
8,000
To Minimum Rent
9,000 4 By Trading A/c
9,000
9,000
9,000
Analytical Table
No.of Installment Cash Price Interest Principle Installment
15,980
Down
4,000
4,000
4,000
11,980
1 Year
5,401
599
5401
6,000
6,579
2 Year
4,671
329
4,671
5,000
1,908
3 Year
1,908
92
1,908
2,000
--- 1,020 15,980
17,000
Journal Entries
1st Year
2nd Year
3rd Year
Particulars
Cr
Dr Cr Dr Cr
Dr
Motor Cycle A/c
Dr
15,980
--To Hire vendor A/c
15,980
--(Being motor Cycle Purchased under HPS)
--Hire Vendor A/c
Dr
4,000
--To Cash A/c
4,000
--(Being the down payment paid
---
SVU(AA2EM) – MARCH/APRIL 2014
10
ending Interest A/c Dr
599
329
92
To Hire vendor A/c
599
329
92
(Being interest credited to vendor)
--Hire-vendor A/c
Dr
6,000
5,000
2,000
To Cash A/c
6,000
5,000
2,000
(Being the amount Paid)
--Depreciation A/c
Dr
---To Motor cycles A/c
---(Being depreciation provided)
--Profit and Loss A/c
Dr
599
329
92
To Interest A/c
599
329
92
To Depreciation A/c
---(Being interest and Depreciation A/c
transferred to P & L A/c)
Note :- Rate of Depreciation was not given in the problem. So, it was not
calculated.
Dr
Hire vendor A/c
Cr
Year
Particulars
Rs.
Year
Particulars
Rs
1 To Cash A/c
4,000 1 By Motor cycle A/c
15,980
To Cash A/c
6,000
By Interest A/c
599
To Balance c/d
6,579
16,579
16,579
2. To cash A/c
5,000 2 By Balance b/d
6,579
To Balance c/d
1,908
By Interest A/c
329
6,908
6,908
3. To Cash A/c
2,000 3 By Balance b/d
1,908
By Interest A/c
92
2,000
2,000
Dr
Year
Particulars
1 To Hire vendor
Interest A/c
Cr
Rs. Year
Particulars
Rs.
599 1 By Profit & Loss A/c
599
599
599
2 To Hire vendor
329 2. By Profit & Loss A/c
329
329
329
3. To Hire vendor
92 3 By Profit & Loss A/c
92
92
92
UNIT – II
4. In the Books of Madras Head Office
Dr
Kakinda Branch A/c
Cr
Particulars
Rs.
Particulars
Rs.
To Branch Stock
7,680 By Cash :
To Branch Debtors
24,000
Cash Sales
1,10,400
To Good sent to Branch A/c
2,11,872 Cash collected from Debtors
88,000 1,98,400
SVU(AAEM) – SEPTEMBER 2010
To Short Workings A/c
2,000
12,000
15,000 2010 By Profit & Loss A/c
2010 To Land Lord A/c
Dr
Date
2007
2008
2009
2010
Particulars
To Bank A/c
To Bank A/c
To Bank A/c
To Bank A/c
Dr
Date
Particulars
2007 To Minimum Rent A/c
2008 To Balance b/d
To Minimum Rent A/c
2009 To Balance b/d
3.
Dr
Date
Particulars
1.1.07 To Vendor A/c
1.1.08 To Balance b/d
1.1.09 To Balance b/d
Dr
Date
1.1.07
31.12.07
Particulars
To Cash A/c
To Cash A/c
To Balance c/d
31.12.08
To Cash A/c
To Balance c/d
31.12.09
To Cash A/c
107
Rs.
10,000
10,000
10,000
15,000
Land Lord A/c
Date
Particulars
2007 By Minimum Rent A/c
2008 By Minimum Rent A/c
2009 By Royalty A/c
2010 By Royalty A/c
Short Workings A/c
Rs.
Date
Particulars
3,250 2007 By Balance c/d
3,250 2008 By Balance c/d
1,000
4,250
4,250 2009 By Royalty A/c
By Profit & Loss A/c
4,250
Motor Van A/c
Rs.
Date
Particulars
37,250 31.12.07 By Depreciation A/c
By Balance c/d
37,250
33,525 31.12.08 By Depreciation A/c
By Balance c/d
33,525
30,172 31.12.09 By Depreciation A/c
By Balance c/d
30,172
Vendor
Rs.
10,000
10,000
18,613
38,613
10,000
9,544
19,544
10,000
A/c
Date
1.1.07
31.12.07
Particulars
By Motor Van
By Interest A/c
1.1.08
31.12.08
By Balance b/d
By Interest A/c
1.1.09
By Balance b/d
By Interest A/c
10,000
Dr
Date
31.12.07
31.12.08
31.12.09
Particulars
To Vendor A/c
To Vendor A/c
To Vendor A/c
Interest A/c
Rs.
Date
1,363 31.12.07
1,363 31.12.08
456 31.12.09
Particulars
By Profit & Loss A/c
By Profit & Loss A/c
By Profit & Loss A/c
12,000
15,000
Cr
Rs.
10,000
10,000
10,000
15,000
Cr
Rs.
3,250
4,250
4,250
2,000
2,250
4,250
Cr
Rs.
3,725
33,525
37,250
3,353
30,172
33,525
3,017
27,155
30,172
Cr
Rs.
37,250
1,363
38,613
18,613
931
19,544
9,544
456
10,000
Cr
Rs.
1,363
1,363
456
SVU(AAEM) – SEPTEMBER 2010
106
may be determined from the test as to whether the expenditure made is incurred for the
maintenance of the earning capacity or for the upkeep of fixed asset in an efficient condition.
f) Narrate the defects in single-entry System : Only the personal accounts of debtors and
creditors are maintained. Real and nominal accounts are not maintained.
g) Explain the necessity of Partner's current accounts. : If they are maintaining capital at
fluctuating, then the all transactions are posted through the capital accounts. The new capital
ratio will be determined after adjusting all the reserves and accumulated profits to the date of
dissolution, but after born in cash of realization loss then the deficiency shared by the solvent
partners in new ratio.
Note : Garner Vs. Murray case applicable only in England but not in India.
h) Explain the methods of valuation of goodwill : Goodwill an intangible real asset. It is not
a fictitious asset. It is the extra attaching to the business with other fixed assets. Goodwill is
generally valued in three ways.
a) Average Profit Method b) Capitalization Method
c) Super Profit Method
i) Give main divisions of share capital of a company : In the prescribed form of the balance
sheet of the company as given in schedule VI of the companies act 1956, the division of share
capital under the following ways: (a) Authorized Capital (b) Issued Capital (c) Subscribed Capital
(d) Called up Capital (e) Paidup Capital.
j) Define sinking fund : Redemption out of provisions by way of sinking fund or insurance
policy methods. The debentures are to be paid on a specified date. It is desirable to make some
arrangements for their redemption otherwise it will be very difficult for the company to pay a
lumpsum at the time when the redemption is due. The best method is to create sinking fund for
this purpose. This method also called as debenture redemption fund method.
SECTION – B :UNIT – I
2.
Analytical Table
Short
S.W.
S.W. Not
Year Min.Rent Royalty Workings Recouped Recouped (P&L) Payments
2007
10,000
6,750
3,250
---
---
10,000
2008
10,000
9,000
1,000
---
---
10,000
2009
10,000 12,000
---
2,000
2,250
10,000
2010
10,000 15,000
---
---
---
15,000
Dr
Date
Particulars
2007 To Land Lord
2008 To Land Lord
Dr
Date
Particulars
2007 To Minimum Rent A/c
2008 To Minimum Rent A/c
2009 To Land Lord A/c
Minimum Rent A/c
Rs.
Date
Particulars
10,000 2007 By Royalty
By Short Workings A/c
10,000
7,500 2008 By Royalty
By Short Workings A/c
10,000
Royalty A/c
Rs.
Date
Particulars
6,750 2007 By Profit & Loss A/c
9,000 2008 By Profit & Loss A/c
10,000 2009 By Profit & Loss A/c
Cr
Rs.
6,750
3,250
10,000
9,000
1,000
10,000
Cr
Rs.
6,750
9,000
12,000
SVU(AA2EM) – MARCH/APRIL 2014
11
To Stock ReserveA/c
By Goods sent to Branch
35,312
(13,440x20/120)
2,240 (2,11,872x20/120)
To Profit & Loss A/c
34,640 By Stock Reserve A/c
(7,680x20/120)
1,280
By Branch Stock A/c
13,440
By Branch Debtors
32,000
2,80,432
2,80,432
Working Notes : Calculation of Closing debtors :
Dr
Debtors A/c
Cr
Particulars
Rs.
Particulars
Rs.
To Balance b/d
24,000 By Cash
88,000
To Credit Sales
96,000 By Balance c/d
32,000
(2,06,400-1,10,400)
(b/f)
1,20,000
1,20,000
5.
Statement of affairs of Mr. Unlucky
Gross
Expected
Book Expected to
Assets
Liabilities
Liabilities
to Rank
Value Produce
List A :
List E : Assets :
1,64,000 Unsecured Creditors
1,57,000 Machinery
30,000
24,000
List B :
Furniture
6,000
3,000
20,000 Fully secured creditor 20,200
Sundry Assets
7,000
6,000
(–) Security
1,02,000
Cash
200
200
(80,000+22,00)
Consignment
10,000
10,000
Surplus as per contra 81,800
List F : Book debts
Good
40,000
40,000
List C :
Doubtful & Bad
20,000
4,000
80,000 Party Secured creditors 80,000
List G :
(–) Security
32,000
Bills Receivable
2,800
2,800
48,000
90,000
List D :
(+) Surplus as per contra (List B)
81,800
6,000 Preferential creditor
6,000
1,71,800
(–) as per contra
6,000 ---- (-) List D: Preferential Creditor
6,000
1,65,800
Deficiency as per List H
39,200
2,05,000
2,05,000
Dr
Particulars
Capital
Profit
Interest on capital
Deficiency as per
Statement of Affairs
Deficiency A/c
Rs.
Particulars
1,00,000 Drawings
41,000 Liability on bills discounted
20,000 Loss on Machinery
(30,000–24,000)
39,200 Loss on Furniture
Cr
Rs.
1,27,200
7,000
6,000
SVU(AA2EM) – MARCH/APRIL 2014
12
3,000
(6,000–3,000)
Loss on sundry Assets
(20,000–4,000)
Bad and doubtful debts
(7,000–6,000)
Loss on stock
(1,20,000 – 80,000)
16,000
1,000
40,000
2,00,200
2,00,200
Working Notes :
6.
Calculation of Unsecured creditors
Particulars
Gross Expected to Rank
Un secured Creditors 1,50,000
1,50,000
Liability on bills
14,000
7,000
1,64,000
1,57,000
UNIT – III
Dr
Income and Expenditure Account for the year ending 31.12.06
Cr
Expenditure
Rs.
Income
To Medicine consumed
25,000 By Subscriptions
50,000
(10,000+30,000–15,000)
(+) Outstanding (31.12.06)
1,000
To Credit Purchase of Medicine 4,000
51,000
(12,000–8,000)
(-) Received in advance on(1.1.06)
1,000
To Honorarium to Doctor
10,000
52,000
To Salaries
27,500 (-) out standing on 1.1.06
500
To Sundry Expenses
500
51,500
To Charity Show Expense
1,000 (+) Received in advance on (31.12.06) 500
To Depreciation equipment
6,000
51,000
(21,000+15,000-30,000)
By Donations
14,500
To Depreciation on Buildings
2,000 By Interest on Investment
7,000
(40,000-38,000)
By Charity show Proceeds
10,000
To Surplus
6,500
82,500
82,500
Balance Sheet as on 31.12.06
Liabilities
Rs.
Assets
Rs.
Capital fund 1,69,500
Buildings
38,000
(+) Surplus
6,500
Equipment
30,000
1,76,000 Investments(7,000x100/7) 1,00,000
Creditors for Medicine 12,000 Subscription receivable
1,000
Subscription received in
advance
500
Medicine
Cash
1,88,500
Working Note :Calculation of Capital Fund:
15,000
4,500
1,88,500
SVU(AAEM) – SEPTEMBER 2010
a)
b)
c)
d)
e)
105
Issued at par and redeemable at par
Issued at 5% premium and redeemable at par.
Issued at 10% discount redeemable at par.
Issued at par and redeemable at 10% premium.
Issued at 5% discount and redeemable at 5% premium.
SolutionS – SVU(AAEM) – SEPTEMBER 2010
SECTION – A
1. a) Define Royalty : A person having right on assets and properties and vested to another
person for lease and get consideration on the property is known as Royalty. Royalty is a
periodical payment based on output or sale for the use of a certain asset or right. The royalties
are usually payable on using of mines, minerals, Oil fields, publications of books, patent rights,
copy rights etc.
b) What is Interest Suspense Account
: This method is adopted by enterprises
having number of transactions and the instalments being payable over fixed period. Under this
method, the hire purchase changes are credited to Interest Suspense Account. The entry is
Buyer A/c
Dr
xxx
To Asset A/c (H.P Sales)
xxx
To Interest Suspense A/c
xxx
The amount to the credit of interest suspense A/c is transferred to the Trading A/c of every
year.
In case of Instalment Purchase System the buyer has draws the following entry.
Asset A/c
Dr
xxx
Interest Suspense A/c
Dr
xxx
To Vendor A/c
xxx
c) What do you understand by goods in transit?
: When the head office sent goods to
the branch but those goods were not received by the branch before closing date of the accounts,
such goods is terms as goods in transit. When the goods in transit made entries in head office
and branch as follows:
i) In th Books of Head Office :Goods in Transit A/c
Dr xxx
To Branch A/c
xxx
ii) In the books of Branch Office :
Goods in Transit A/c
Dr xxx
To Head Office A/c
xxx
d) Differentiate Deficiency and surplus : A positive or favorable balance of trade is known
as a trade surplus if it consists of exporting more than is imported; a negative or unfavorable
balance is referred to as a trade deficit.
e) Define Revenue Expenditure
: It consists of expenditure incurred in one period of
account, the full benefit of which is consumed in that period. It includes purchasing assets
required for resale at a profit or for being made into saleable goods, maintaining fixed assets in
good working order, meeting the day-to-day expenses of carrying on business. Cost of goods,
raw materials and stores, replacements, renewals, repairs, depreciation of the fixed assets, rent,
rates and taxes, wages and salaries, carriage, insurance and other trade expenses are few
examples of such expenditures. Such items appear in the Trading and Profit and Loss A/c and
SVU(AAEM) – SEPTEMBER 2010
104
d) Depreciate : Furniture 10% p.a.; Plant 20% p.a.; Motor van 25% p.a.
e) Create Rs.500 as bad debt and 5% on doubtful.
Prepare a statement showing the trading and net profit for the year ending 31.12.09 and
the statement of affairs as on that date.
UNIT – IV
8. Sreeram and Jayaram are equal partners in a firm. The Balance Sheet of the firm as on
31st December 2009 was as follows :
Liabilities
Rs.
Assets
Rs.
Creditors
1,000 Cash in hand
600
Bills Payable
1,000 Debtors
1,500
Reserve fund
400 Stock
1,400
Sreeram Capital A/c 1,500 Furniture
400
Jayaram Capital A/c 1,000 Machinery
1,000
4,900
4,900
They have decided to admit Hareram as a new partner on 1st January 2010, with onethird share in future profits, subject to the following conditions :
a) Create Rs.200 as bad debt and 5% on Reserve for bad and doubtful debts.
b) Charge Depreciation: Furniture @ 5% p.a.; Machinery @10% p.a.
c) Investments Rs.400 not mentioned in the above Balance Sheet.
d) Hareram has to bring Rs.1,000 for capital and create goodwill for Rs.1,000.
Prepare Revaluation Account, Partners capital accounts and Balance Sheet after
admission of Hareram as on 1st Januray 2010.
9. The following was the Balance Sheet of Rao, Murthy and Sarma on 31st December 2008 :
Liabilities
Rs.
Assets
Rs.
Creditors
4,500 Cash at Bank
7,800
Reserve Fund
4,800 Stock
9,000
Rao Capital A/c
15,000 Debtors
9,000
Murthy Capital A/c
7,500 Furniture
12,000
Sarma Capital A/c
7,500 Tools
1,500
39,300
39,300
Sarma died on 31st March 2009 under the terms of partnership deed the executers of the
deceased were entitled to –
a) Amount standing to the credit of Partner capital account
b) Interest on capital at 5% per annum
c) Share of goodwill on the basis of twice the average of the past three years profits.
d) Share of profits from closing of the last financial year to the death on the basis of the last
year's profits.
e) The profits are 2008 Rs.10,500; 2007 Rs.12,000; 2006 Rs.9,000
f) Profits are divisible among partners in capital ratio.
Pass necessary journal entries and find out the amount payable to the partner Sarma.
UNIT – V
10. Gowri Priya Co. Ltd., Registered with 60,000 equity shares of Rs.20 per share.
Company offered : 50,000 equity shares to the general public, at a premium of 10%. The public
subscribed for 45,000 shares only. The amount payable on calls are as under :
On application, Rs.4 per share
On Allotment, Rs.8 per share (including premium)
On 1st Call (final), Rs.10 per share
The company made calls on all shares, money was received in full except on 250 equity
shares on allotment and 1st call. The company forfeited these shares by giving proper notice.
Further, the company received these forfeited equity shares at Rs.15 per share. You are required
to pass Necessary journal entries and prepare Balance Sheet with suitable item recorded.
11. Aparna Co. Ltd. offered 4,000 6% debentures of Rs.100 each. Pass necessary Journal
entries in the following cases :
SVU(AA2EM) – MARCH/APRIL 2014
13
Balance Sheet as an 1.1.06
Liabilities
Rs.
Assets
Rs.
Creditors for Medicines 8,000 Building
40,000
Subscription received
Equipment
21,000
in advance
1,000 Medicine
10,000
Capital Fund
1,69,500 Subscription receivable
500
Investments
1,00,000
Cash
7,000
1,78,500
1,78,500
7.
Statement of affairs as on 31.12.07 and 31.12.08
Liabilities 31.12.07 31.12.08
Assets
31.12.07 31.12.08
Sundry creditors 22,000 29,000 Cash in hand
200
300
Capital (b/f) 26,500 34,800 Cash Bank
3,000 2,000
Stock in trade
20,000 14,000
Sundry Debtors 8,500 19,000
Fixture & Fitting
1,800 1,500
Plant and Machinery
15,000 27,000
48,500 63,800
48,500 63,800
Statement of Profit or Loss
Particulars
Rs.
Capital as on 31.12.08 34,800
(+) Drawings
9,000
43,800
(–)Further Capital
5,000
Adjusted closing capital 38,800
(–) Capital as on 31.12.07 26,500
Profit
12,300
UNIT – IV
8.
Journal Entries
Date
Particulars
Debit Credit
31.12.9 Cash A/c
Dr 21,000
To Kappu Capital A/c
12,000
To Goodwill A/c
9,000
(Being Kappu brought cash for Capital and good will)
Goodwill A/c
Dr 9,000
To Appu Capital A/c
6,000
To Pappu Capital A/c
3,000
(Being the goodwill shared by old partners)
General Reserve A/c
Dr 24,000
To Appu Capital A/c
16,000
To Pappu Capital A/c
8,000
(Being the general reserve balance shared
by old Partners)
Revaluation A/c
Dr 1,800
SVU(AA2EM) – MARCH/APRIL 2014
To Stock A/c
To Furniture A/c
(Being depreciation in the value of Stock and furniture)
Revaluation A/c
To Reserve for bad debts
(Being provided on debtors)
Appu capital
Pappu Capital A/c
To Revaluation A/c
(Being Loss on revaluation distributed)
Dr
Particulars
To Furniture
To Stock
To Reserve for Bad debts
14
Dr 9,200
Dr 4,600
Revaluation A/c
Rs.
Particulars
300 By Loss :
1,500 Appu (13,800x2/3)
12,000 Pappu(13,800x1/3)
13,800
12,000
13,800
Cr
Rs.
9,200
4,600 13,800
13,800
Dr
Capital Accounts
Cr
Particulars
Appu Pappu Kappu
Particulars
Appu Pappu Kappu
To Revaluation A/c 9,200 4,600
--- By Balance b/d
40,000 30,000 -To Balance c/d
52,800 36,400 12,000 By General Reserve 16,000 8,000
-By Cash
--- 12,000
By Goodwill
6,000 3,000 -62,000 41,000 12,000
By Balace b/d
62,000 41,000 12,000
52,800 36,400 12,000
Balance sheet of Appu, Pappu and Kappu as on 31.12.09
Liabilities
Rs.
Assets
Rs.
Appu Capital 52,800
Freehold property
20,000
Pappu Capital 36,400
Furniture
6,000
Kappu Capital 12,000 (–) Depriciation
300 5,700
Creditors
16,000
Stock
12,000
(–) Depreciation
1,500 10,500
Debbotrs
60,000
(–) Provision for bad debt 12,000 48,000
Cash (12,000+21,000)
33,000
1,17,200
1,17,200
9.
Dr
Particulars
To Sundry Debtors
To Stock
Realization A/c
Rs
Particulars
4,400 By Cash (Assets)
13,000 By Loss :
103
Prepare Chennai Branch account to identify its net profit and pass necessary entries to
adjust the value of stock.
5. The assets and liabilities of Mr.Seshagiri as on 31st December, 2009 was Rs.56,000 and
Rs.44,000 respectively. He filed his petition in the unsolvency court and estimated his deficiency
to be Rs.30,000. Later he found that the following items were not recorded in his books:
a) Interest at 6% on his capital from 1st January 2009.
b) A contingent liability of Rs.2,500 on bills discounted by him for Rs.10,000.
c) Amount due on wages Rs.300; on salaries Rs.700; on rent Rs.300 and rates and taxes
Rs.200
d) A loan of Rs.2,000 taken from a friend for the marriage of his daughter.
Prepare his statement of affairs and deficiency account.
1,500
300
Dr 12,000
SVU(AAEM) – SEPTEMBER 2010
Cr
Rs.
18,400
UNIT – III
6. The Receipts and Payments Account of Anantapur District Sports Club, for the year
ending 31st December, 2009 was as follows :
Receipts
Rs.
Payments
Rs.
To Balance b/d
1,500 By Salaries
12,000
To Subscriptions
21,000 By Office Expenses
3,500
To Tournament fund
2,000 By Printing & Stationery
2,500
To Donations for construction of buildings 15,000 By Insurance
500
To Legacies
5,000 By Advertisement
2,000
To Sale of Magazines
500 By Investments
11,000
To Sale of furniture (Cost Rs.200)
300 By Tournament Expenses 1,500
To Other Receipts
1,700 By Wages
8,000
By Other Expenses
1,000
By Balance c/d
5,000
47,000
47,000
Additional Information :
a) Subscriptions received in advance for 2010 Rs.500
b) Subscriptions outstanding for 2008 Rs.1,000 and for 2009 Rs.1,500.
c) Capitalise half of the legacies
d) Outstanding expenses : Salaries Rs.2,500
e) Prepaid insurance Rs.200
f) Office expenses include Rs.300 for the last year and Rs.200 for this current year.
Prepare Income and Expenditure Account and Balance Sheet as on 31st December 2009.
7. Mr. Gambheer, a trader keeps his accounts under single-entry system. The following
details are extracted from his books :
31.12.08 31.12.09
Particulars
Rs.
Rs.
Stock in Trade
12,700
10,000
Creditors
6,000
8,100
Debtors
6,700
6,300
Cash in hand
250
300
Bank Overdraft
7,500
4,800
Bills Receivable
3,000
1,600
Furniture
2,200
2,200
Motor Van
6,000
6,000
Plant
15,000
15,000
Additional Information :
a) The personal drawings Rs.450 per month
b) Additional capital introduced Rs.3,000 on 1-7-09
c) Change interest on capital at 5% annum and on drawings Rs.500 per annum.
SRI VENKATESWARA UNIVERSITY
II B.COM EXAMINATIONS, SEPTEMBER 2010
354 – ADVANCED ACCOUNTING
Time : 3 Hr]
(Revised from 2009-2010)
[Max. Marks : 70
SECTION – A (52 = 10 Marks)
Answer any FIVE questions. Each question carries 2 marks
1. a) Define Royalty
b) What is Interest Suspense Account
c) What do you understand by goods in transit?
d) Differentiate Deficiency and surplus.
e) Define Revenue Expenditure
f) Narrate the defects in single-entry System.
g) Explain the necessity of Partner's current accounts.
h) Explain the methods of valuation of goodwill
i) Give main divisions of share capital of a company
j) Define sinking fund
SECTION – B (5  12 = 60 Marks)
Answer any FIVE questions, choosing ONE from each Unit
Each question carries 12 marks
UNIT – I
2. Harini Coal Co. Ltd., leased a colliery on 1st January 2007 at a minimum rent of
Rs.10,000. The royalty was paid at the rate of Rs.1.50 per ton produced. The short-workings are
recouped over a period of first three years of the lease. The output for the first four years, viz.,
2007, 2008, 2009 and 2010 was 4,500 tons, 6,000 tons, 8,000 tons and 10,000 tons
respectively. Show Minimum rent account, Royalty account, Landlord Account and Short
workings account.
3. On Jan.1, 2007, Ananta Transport Company purchased Motor van from Viswam Motor
Builders on hire purchase system. The cash price was Rs.37,250 and payments were made as
follows. Rs.10,000 on signing the agreement and the balance in three annual instalments of
Rs.10,000 each. 5 percent per annum interest was changed by the vendor. Change depreciation
at the rate of 10 percent per annum on diminishing balance method on Motor van. Prepare Motor
van account, Viswam Motor Builders account and Interest account in the books of Ananta
Transport Company.
UNIT – II
4. Chandrabose Trading Co. of Tirupati had its branch at Chennai. The following details are
extracted from its records relating to its branch as on 31st December 2009. The Head Office is
sending goods marked at 20% above cost to its branch at Chennai :
Rs.
Stock at Chennai (1.4.08)
1,800
Debtors at Chennai (1.4.08)
3,000
Petty cash at Chennai (1.4.08
30
Goods sent to Branch
30,000
Remittances from the branch :
Cash Sales
6,000
Cash received from debtors 21,000 27,000
Cheques sent to branch:
Salary
900
Rent and Taxes
150
Petty Cash
110 1,160
Stock at branch (31.3.09)
3,000
Debtors at branch (31.3.09)
4,800
Petty cash at branch (31.3.09)
20
102
SVU(AA2EM) – MARCH/APRIL 2014
To Furniture & Fitting
2,000
To Plant and Machinery
8,200
To Cash (Expenses)
600
28,200
Dr
Particulars
To Balance b/d
To Realization A/c
Dr
Particulars
To Cash
To Deficiency A/c
Dr
Particulars
To Manoj Capital A/c
To Sunil Capital A/c
Dr
15
Monoj
Sunil
Capital Accounts
Manoj Sunil
Particulars
-2,800 By Balance b/d
4,900 4,900 By DeficienecyA/c
4,900 7,700
4,900
4,900
9,800
28,200
Cr
Manoj Sunil
3,000 -1,900 7,700
4,900 7,700
Creditors A/c
Rs.
Particulars
18,400 By Balance b/d
9,600
28,000
Cr
Rs.
28,000
Deficiency A/c
Rs.
Particulars
1,900 By Creditors
7,700
9,600
Cr
Rs.
9,600
28,000
9,600
Cash A/c
Cr
Rs.
Particulars
Rs.
600 By Realization A/c
600
18,400 By Creditors A/c
18,400
19,000
19,000
UNIT – V
10.
Jounal Entries in the books of vivek Ltd.
Date
Particulars
Debit
Credit
Bank A/c
Dr 40,50,000
To Share Application A/c(90,000x45)
40,50,000
(Being share application money received)
Share Application A/c
Dr 40,50,000
To Share Capital A/c
40,50,000
(Being Application money Transfer to capital)
Share Allotment A/c (90,000x45)
Dr 40,50,000
To Share Capital (90,000x25)
22,50,000
To Share Premium A/c (90,000x20)
18,00,000
(Being share allotment was due)
Bank A/c
Dr 40,50,000
To Share Allotment A/c
40,50,000
(Being Share Allotment money received)
Particulars
To Balance b/d
To Realization A/c
SVU(AA2EM) – MARCH/APRIL 2014
16
Share finial Call A/c
Dr 27,00,000
To Share Capital (90,000x30)
27,00,000
(Being finial call money due)
Bank A/c
Dr 26,70,000
To Shre final call (89,000x30)
26,70,000
(Being call money received on 89,000 shares)
Share Capital A/c (1,000x100)
Dr 1,00,00
To Share finial call A/c (1,000x30)
30,000
To Share forfeature A/c
70,000
(Being 1000 shares are forfeited)
Bank A/c (1,000x80)
Dr 80,000
Share forfeiture A/c (1,000x20)
Dr 20,000
To Share capital A/c (1,000x100)
1,00,000
(Being forfeited Share are reissued @ 80 each)
Share forfeiture A/c
Dr 50,000
To Capital Reserve A/c
50,000
(Being forfeiture account transfer to capital Reserve)
11.
Journal Entries in the books of Raj Ltd.
Date
Particulars
Debit Credit
Bank A/c (1,500x20)
Dr 30,000
To Share application A/c
30,000
(Being Application money received)
Share Application A/c
Dr 30,000
To Share Capital A/c
30,000
(Being Application money transfer to share Capital A/c)
Share Allotment A/c (1,500x30)
Dr 45,000
To Share capital A/c (1,500x30)
45,000
(Being Allotment money was due)
Bank A/c
Dr 45,000
To Share Allotment A/c
45,000
(Being Allotment money received)
Share first call A/c (1,500x20)
Dr 30,000
To Share capital A/c
30,000
(Being first call money due)
Bank A/c (1,450x20)
Dr 29,000
To Share first call A/c
29,000
(Being first Call money received on 1,450 shares)
Shre final call A/c (1,500x30)
Dr 45,000
To Share Capital A/c
45,000
(Being final call due)
Bank A/c (1,450x30)
Dr 43,500
To Share final call A/c
43,500
(Being final call money received on 1,450 shares)
Share capital A/c (50x100)
Dr 5,000
SVU(AAEM) – MARCH 2010
101
 
20
21
Balance Sheet
Liabilities
Rs.
Assets
Share Capital:
Bank
45,000 shares @10 each 4,50,000 Machinery
Capital Reserve
300
4,50,300
Rs.
3,00,300
1,50,000
25,220
9,261
a)
b)
c)
d)
20
21
100
 20
  20
 20
 20

21 
21
21
21 
25,220
9,261
is the total amount to be paid, the instalment including interest is Re.1
Re.1 is the total amount to be paid, the instalment including interest is
9,261
25,220
 15,000 is the total amount to be paid, the instalment including interest is
4,50,300

9,261
25,220
 Rs.15,000 = Rs.5,508.13
UNIT – V
11.
Date
SVU(AAEM) – MARCH 2010
10.
Journal Entries
Particulars
At the time of Issue :
Bank A/c
Discount A/c
To 10% Debentures A/c
(Being Debentures Issued at Discount)
Bank A/c
Discount A/c
Loss on Redemption A/c
To Bank A/c
To Premium on Redemption of Debentures A/c
(Being Debentures Redeemed at Premium)
Bank A/c
Loss on Redemption A/c
To Debentures A/c
To premium on Redemption
(Being Debentures Redeemed at Premium)
Bank A/c
To 10% Debenture A/c
To Premium on redemption of debentures A/c
(Being Debentures issued at Premium)
At the time of Redemption :a) 10% Debentures A/c
To Bank A/c
(Being Debentures Redeemed at par)
b) 10% Debentures A/c
Premium on Redemption of Debenture A/c
To Bank A/c
(Being Debentures Redeemed at Premium)
b) 10% Debentures A/c
Premium on Redemption of Debenture A/c
To Bank A/c
(Being Debentures Redeemed at Premium)
d) 10% Debentures A/c
To Bank
(being Debentures Redeemed at par)
LF
Dr
Dr
Debit
Credit
95,000
5,000
1,00,000
Dr
Dr
Dr
95,000
5,000
5,000
1,00,000
5,000
Dr
Dr
1,00,000
5,000
1,00,000
5,000
Dr
1,05,000
Dr
1,00,000
Dr
Dr
1,00,000
5,000
1,00,000
5,000
1,00,000
1,05,000
Dr
Dr
1,00,000
5,000
1,05,000
Dr
1,00,000
1,00,000
Date
Journal Entries
Particulars
Machinery A/c
Dr
To Equity Share Capital
(Being Machinery Purchased)
Bank A/c (30,0005)
Dr
To Share Application A/c
(being Application money received)
Share Application A/c
Dr
To Share Capital A/c
(being Application money transferred to Share Capital)
Share Allotment A/c (30,0003)
Dr
To Share Capital A/c
(Being allotment amount due)
Bank A/c
Dr
Call in Arrears A/c (1003)
Dr
To Share Allotment A/c
To Calls in Advance A/c (1002)
(Being allotment money received)
Share First Call A/c (30,0002)
Dr
To Share Capital A/c
(Being call money due)
Bank A/c
Dr
Calls in Advance A/c
Dr
Calls in Arrears A/c(1002)
Dr
To Share Forfeited A/c
(Being call money due)
Share Capital A/c(10010)
Dr
To Calls in Arrears
To Share Forfeited A/c
(Being share forfeited)
Bank A/c
Dr
Share forfeited A/c
Dr
To Share Capital A/c (10010)
(being 100 shares reissued)
Shares forfeited A/c
Dr
To Capital Reserve A/c
(Being forfeited amount Tr. to Capital Reserve A/c)
LF
Debit
Credit
1,50,000
1,50,000
1,50,000
1,50,000
1,50,000
1,50,000
90,000
90,000
9,17,000
300
90,000
2,000
60,000
60,000
57,800
2,000
200
60,000
1,000
500
500
800
200
1,000
300
300
SVU(AA2EM) – MARCH/APRIL 2014
To Share first call A/c (50x20)
To Share final call A/c (50x30)
To Share for forfeiture A/c
(Being 50 Sharers are forfeited)
Bank A/c (50x70)
Share forfeiture (50x30) A/c
To Share Capita A/c (50x100)
(Being 50 Shares are reissued)
Share forfeiture A/c
To Capital Reserve A/c(2,500-1,500)
(Being forfeiture a/c transfer to Capital Reserve)
17
1,000
1,500
2,500
Dr 3,500
Dr 1,500
5,000
Dr 1,000
1,000
SRI VENKATESWARA UNIVERSITY
II B.Com. DEGREE EXAMINATION, SEPT./OCT. 2014
Paper II (S-354) –ADVANCED ACCOUNTING
Time : 3 Hrs]
[Max. : 70 Marks
SECTION – A
Answer any FIVE questions. Each question carries 2 marks.
(Marks: 5  2 = 10)
1. a) Define Royalties
b) Explain down payment.
c) Discuss the need for branch accounts
d) Statement of affairs
e) Revenue receipts
f) How can you ascertain the profit under single entry system
g) New Profit sharing Ratio
h) Good will
i) What is forfeiture shares?
j) Explain the features of sinking fund account.
SECTION – B
Answer any ONE question from each unit. Each question carries 12 marks.
(Marks: 5  12 = 60)
UNIT-I
2. Raju took a colliery on lease. The dead rent was Rs.75,000 a year,
merging into a royalty of Rs.35 per tonne of coal raised, with the right to recover
short workings out of royalties of two subsequent years from the period in which
the short workings arose. The output raised were:
Year:
1
2
3
4
5
Production (Tonnes): 1,000 1,500 2,500 1,500 1,000
Give necessary ledger accounts in the books of Raju.
OR
3. Anurag Purchased a van on 1st January, 2008 the cash price being
Rs.2,24,000. The purchase is on hire purchase basis, Rs.60,000 being paid on
SVU(AA2EM) – SEP./OCT. 2014
18
signing the agreement and there after Rs.60,000 being paid annually for 3 years.
Interest was charged at 5% p.a. Depreciation was written off at the rate of 20%
p.a. on the reducing instalment system. Give necessary ledger accounts in the
books of Anurag.
UNIT-II
4. A Head Office in Delhi send goods to its branch at Hyderabad market at
20% above cost. From the following particulars, draw up Branch Account in the
Head Office books.
Rs.
Stock of goods at Hyderabad on 1-4-10(I.P)
3,600
Stock of goods at Hyderabad on 31-3-11(I.P)
4,200
Goods sent to Branch (Invoice price)
3,00,000
Goods returned to H.O (Invoice price)
30,000
Cash sales
50,000
Credit sales
3,60,000
Returns from customers
10,000
Discount allowed to customers
12,000
Bad debts
1,200
Cash received from customers
3,30,000
Sundry debtors on 1-4-10
56,000
Sundry debtors on 31-3-11
62,800
Establishment expenses at Hyderabad Branch paid by H.O.
90,000
OR
5. Prakash filed a petition for insolvency on 31st March 2013. The details
available from his records as on date is as follows:
Sundry debtors:
Good
Rs.5,000
Doubtful
Rs.30,000(estimated to produce Rs.25,000)
Bad
Rs.15,000
2,000 shares in XYZ Co.Ltd (Estimated to produce Rs.15,000) Rs.25,000.
Loss in betting Rs.2,000
Shares in ABC Co.Ltd (Estimated to realize Rs.75,000) Rs.91,500
Creditors Rs.85,600
Creditors holding second charge as shares of ABC Co.Ltd to the extent of
Rs.25,000; 30,000 creditors holding first charge on shares of ABC Co. Ltd.
Rs.40,000, Bills payable Rs.4,000 Creditors for rent taxes, wages (of which
Rs.4,600 is preferential) Rs.5,000
Furniture (Estimated to realise Rs.3,000) Rs.15,000 Bills receivable (Estimated to
realise Rs.7,000) Rs.9,000 stock (Estimated to realise Rs.30,450) Rs.35,950 cash
at bank Rs.550.
He commenced with capital of Rs.70,000 on 1-4-10 Business resulted in
profit of Rs.12,300 and Rs.13,600 for first two years respectively and loss of
Rs.8,500 in the hard year, after allowing Rs.7,000 towards interest on capital
every year, Total withdrawals for the entire period Rs.44,000.
SVU(AAEM) – MARCH 2010
99
By Revaluation
By Goodwill
54,277.5
54,277.5
Balance Sheet
Liabilities
Rs.
Assets
Capitals:
Cash (14,000+18,000)
Soori
54,277.5
Debtors
Hari
54,277.5
(-) RBDD
Giri
10,000.0 1,18,555 Stock
Creditors
2,500 (-) Investments
Bills Payable
1,000 Furniture
Outstanding Expenses
500 Motor Van
Plant (13,400 – 670)
Buildings
(+) Appreciation
1,22,555
277.5
4,000
54,277.5
SVU(AAEM) – MARCH 2010
277.5
4,000
54,277.5
Tennis Fund(9000-900)
Subscriptions Rec. in Adv.
Outstanding Salaries
Rs.
32,000
29,000
1,450
17,000
1,700
9,100
5,900
27,550
7.
15,300
10,000
9,025
12,730
15,000
1,22,555
8,100 Tennis Balls
600 Furniture
450 (-) Depreciation
Cash in hand
Cash at Bank
O/S Subscriptions
O/s Interest
62,900
Statement of Affairs as on 1.9.08
Particulars
Rs.
Particulars
Creditors
15,000 Stock
Outstanding Expenses
5,000 Debtors
Capital (b/f)
65,000 Cash in hand
Bank Balance
Furniture
85,000
9.
Dr
Particulars
To Stock
To Furniture
To Plant & Machinery
To Building
To Provision for Doubtful Debts
Dr
Particulars
To Revaluation A/c
To Cash
To Sushmitha's Loan A/c
Dr
Date
Particulars
30.6.07 To Bank
To Balance b/d
30.6.08 To Bank
To balance c/d
30.6.09 To Bank
Revaluation A/c
Rs.
Particulars
1,150 By Loss to Capital A/cs:
250
Susmitha
350
Sirisha
2,000
Sailaja
425
4,200
Susmihta's Capital A/c
Rs.
Particulars
2,100 By Balance b/d
5,525 By Profit & Loss A/c
15,000 By Goodwill
22,625
Susmitha's Loan A/c
Rs.
Date
5,508.13 1.7.06
10,241.88 30.6.07
15,750.00
5,508.13 1.7.07
5,245.84 30.6.08
10,753.97
5,508.13 1.7.08
30.6.09
5,508.13
Working Notes :
Calculation of cash Instalment :
Amount due at the end of one year at 5% Interest 
 Amount due at the beginning of the year 
Amount due at the beginning of three years
100
105
Particulars
Bank Balance
Creditors
Outstanding Expenses
Capital (b/f)
Cr
Rs.
2,100
1,400
700 4,200
4,200
By Balance b/d
By Interest
By Balance b/d
By Interest
Rs.
(-) Additional Capital
(-) Opening Capital 1.7.08
Profit during the year
UNIT – IV
Dr
8.
Particulars
To Depreciation on Stock
To Investments
To Furniture
To Motor Van
To Plant
To RBDD
To Soori Capital
To Hari Capital
105
100
or
10
21
Rs.
40,000
30,000
2,000
10,000
3,000
85,000
Statement of Affairs as on 30.06.09
Rs.
Particulars
5,000 Closing Stock
25,000 Debtors
8,000 Cash in hand
64,800 Furniture
2,000
(-) Depreciation
200
1,02,800
Capital as on 30.06.09
(+) Drawings
Rs.
20,000
1,125
1,500
22,625
Rs.
15,000.00
750.00
15,750.00
10,241.88
512.09
10,753.97
5,245.84
262.29
5,508.13
400
2,000
100 1,900
400
3,790
500
640
62,900
Rs.
60,000
40,000
1,000
1,800
1,02,800
Statement of Profit
Cr
Cr
Particulars
By Capital A/c
By Interest
98
Dr
Particulars
To Balance c/d
Soori
54,277.5
Rs.
64,800
12,000
76,800
2,000
74,800
65,000
9,800
Revaluation Account
Rs.
Particulars
1,700 By Buildings
1,000
50
475
670
1,450
277.5
277.5
5,900
Capital A/c
Hari
Particulars
54,277.5 By Balance
Soori
50,000
Cr
Rs.
5,900
5,900
Cr
Hari
50,000
SVU(AA2EM) – SEP./OCT. 2014
19
Prepare deficiency account and statement of affairs account and
statement of affair from the above data.
UNIT-III
6. From the following receipts and payments account of a sports club.
Prepare income and expenditure A/c for the year ended by 31st December, 2012.
Receipts
Rs.
Payments
Rs.
To Cash in hand
400 By Bank Overdraft
8,000
To member subscriptions
14,000 By salaries
3,000
To Donation for club
20,000 By rent rates & taxes
3,600
To entertainment receipts
6,200 By insurance
600
To entrance fees
1,400 By entertainment
4,200
To cricket fees
500 By Furniture
3,900
To sale for old news papers
100 By news papers
900
To Sundry donations
4,000 By general expenses
500
To interest on securities
224 By cash and Bank bal:
in hand
304
with bank
920
Fixed deposit
20,000
46,824
46,824
Members subscriptions include Rs.1200 received for the year 2011 and
Rs.600 for the year 2013. salaries include Rs.400 payable for the year 2012. Onehalf of the entrance fees is to be treated as income membership subscriptions
amounting to Rs.500 are in arrears.
OR
7. From the following particulars prepare a statement of profit & loss of the
year ended 31st December, 2012.
Opening
closing
(1-1-2012) (31-12-12)
Cash
4,000
3,000
Bank
10,000 5,000(O.D)
Debtors
80,000
75,000
Stock
30,000
28,000
Creditors
42,000
37,000
Machinery
10,000
15,000
Furniture
1,000
1,000
The proprietor drew at the rate of Rs.750 per month. He introduce
Rs.3,000 as fresh capital.
UNIT-IV
8. The balance sheet of Anil and Sunil on 31st March, 2012 is set out below;
They share profit and losses in the ratio of 2:1:
Liabilities
Rs.
Assets
Rs.
Anil's capital
40,000 Freehold property
20,000
Sunil's capital
30,000 Furniture
6,000
General reserve
24,000 Stock
12,000
creditors
16,000 Debtors
60,000
SVU(AA2EM) – SEP./OCT. 2014
20
6,000
6,000
1,10,000
1,10,000
They agreed to admit Vinil in to the partnership firm: subject to the
following terms and conditions:
a) Vinil will bring the Rs.21,000 of which Rs.9,000 will be treated as his share
of goodwill to be treated in the business.
b) He will be untitled to one-fourth share of the profits.
c) 50% of the general reserve is to remain as a provision for bad and
doubtful debts.
d) Depreciation is to be provided on furniture @ 5%.
e) Stock is to be revalued at Rs.10,500
Give journal entries to give effect to these arrangement and construct the
balance sheet of the new firm.
OR
9. A,B & C share profits in the ratio 3:2:1 on 31-12-08, Their balance sheet
was as follows:
Liabilitis
Rs.
Assets
Rs.
Creditors
12,000 Machinery 25,000
General reserve
3,000 Stock
11,000
Capital:
Debtors
9,500
A
20,000 Goodwill
13,000
B
15,000 Cash
1,500
C
10,000
60,000
60,000
On the above date, the firm was dissolved. The assets excepts cash
realized Rs.60,000. The creditors were settled at Rs.11,500. Dissolution expenses
amounted Rs.800. Give necessary ledger accounts.
UNIT-V
10. A company issued Rs.5,00,000 share capital divided into Rs.10 shares at
premium of Rs.4 per share, payable as under:
On Application Rs.3 per share: on allotment Rs.4 per share and Rs.2 premium; on
final payment Rs.3 per share and Rs.2 premium.
Over-payments on application were to be applied towards sums due on allotment
and final call. Where no allotment was made, application money was to be
returned in full. The issue was oversubscribed to the extent of 13,000 shares.
Applicants for 12,000 shares were allotted only 1000 and applicants for 2,000
were sent letters of regret. All money due to allotment and final call was duly
received. Make the necessary entries in company's books.
OR
11. Journalise following transactions at the time of issue and redemption of
debentures:
a) A debenture issued at Rs.95, repayable at Rs.100
b) A debenture issued at Rs.95, repayable at Rs.105
c) A debenture issued at Rs.100, repayable at Rs.105
Cash
Profit & Loss A/c.
SVU(AAEM) – MARCH 2010
97
91,400
7,600
99,000
Deficiency as per list 'H'
99,000
SVU(AAEM) – MARCH 2010
31.12.05 To Cash A/c
To Balance c/d
30,000 31.12.05 By Interest A/c(82,0005/100)
56,100
1,16,100
30,000 1.1.06 By Balance b/d
28,905 31.12.06 By Interest A/c(56,1005/100)
58,905
30,000 1.1.07 By Balance b/d
By Interest A/c
30,000
31.12.06 To Cash A/c
To Balance c/d
Deficiency A/c as per List H
Rs.
Particulars
Rs.
Capital
70,000 Net Loss
5,000
Net Profit (8,800+10,100)
19,900 Bad debt(5,000+15,000)
20,000
10,500 Drawings
30,000
Interest on Capital (35003)
Deficiency as per
Other losses
Statement of Affairs
7,600 Shares in Vasavi
10,000
Shares in Bangalore
16,500
Loss on Furniture
12,000
Loss on Stock
5,500
Loss on Bills Receivable
2,000
Loss through betting
2,000
Difference in Trial Balance
4,000
1,07,000
1,07,000
UNIT – III
6.
Balance Sheet as on 1.1.09
Liabilities
Rs.
Assets
Rs.
Outstanding Salaries
600 Cash
2,000
Capital Fund
1,750 Outstanding Subscription
350
2,350
2,350
Particulars
Dr
Expenditure
To Secretary Honorarium
To Printing
To Insurance
(-) Prepaid
To Postage
To Sundry Expense
To Repairs
To Salaries & Wages
(-) Last Year
(+) Outstanding 2009
To Tennis bond (2,000-400)
To Depreciation:
on New Buildings
(40,0002.5/100)
On Furniture(2,0005/100)
To Surplus
Liabilities
Capital Fund
(+) Donations
(+) Entrance Fees
(+) Surplus
Income and Expenditure A/c
Rs.
Income
1,000 By Entrance fees
200 By Subscription
360
(-) Received in Adv.
270
90
25 (-) Last Year
475
750 (+) Outstanding for 2009
2,800
By Locker Rent
600
By Miscellaneous Receipts
2,200
By Rent on Bonds
450 2,650 (16,0008/1006/12)
1,600
31.12.07 To Cash A/c
Dr
Date
31.12.05
31.12.06
31.12.07
Particulars
To Abilash A/c
To Abilash A/c
To Abilash A/c
4.
Dr
Cr
Rs.
1,500
5,100
600
4,500
350
4,150
500 4,650
300
1,300
640
Particulars
To Branch Stock A/c
To Branch Debtors A/c
To Petty Cash A/c
To Goods sent to branch
(-) Returns
To Bank (for Expenses)
Salaries
Rent & Tax
Petty Cash
To General P & L A/c
5.
Book
Value
96
Interest A/c
Rs.
Date
4,100 31.12.05
2,805 31.12.06
1,095 31.12.07
UNIT – II
Estimated
to Rank
Particulars
Unsecured Creditors as per List 'A':
8,000 Bills Payable
400 Rent, Rates & Taxes
88,600 Creditors
Fully Secured as per List 'B':
1,000
100
500
8,390
Balance Sheet as on 31.12.09
Rs.
Assets
1,750
New Buildings
50,000
(-) Depreciation
1,500
8% Bonds
500
53,750 Prepaid Insurance
8,390
Rs.
40,000
1,000 39,000
16,000
270
Shares in Bangalore
40,000 (-) Creditors 1st charge
Surplus to Contra
Partly Secured Creditors as per List
'C':
Second chase creditors
30,000 (-) Security
Preferential Creditors as per List 'b' :
Preferential Creditors
4,600 (-) Deduction
50,000
40,000
10,000
30,000
25,000
90,000
3,15,000 4,05,000
37,500
72,000
300
Property as per List 'E':
8,000 Cash in Hand
400 Furniture
85,600 Stock
Shares in Vasavi Ltd.
Book debts as per List
'F':
Good
--- Doubtful
Bad
B/R as per List 'G':
Bills Receivable
Add: Surplus
4,600
4,600
Cr
Rs.
Particulars
5,000
--- (-) Deduction
1,16,100
56,100
2,805
58,905
28,905
1,095
30,000
Cr
Rs.
4,100
2,805
1,095
Particulars
By Profit & Loss A/c
By Profit & Loss A/c
By Profit & Loss A/c
Bangalore Branch A/c in H.O. Books
Rs.
Particulars
22,500 By Cash :
45,000
Cash Sales
450
from Debtors
3,78,000
By Branch Stock
3,000 3,75,000 By Branch Debtors
By Branch Petty Cash
13,500
2,300
1,700 17,500
54,350
5,14,800
Statement of Affairs as on 31.12.09
4,100
5,14,800
Book Estimated
Value
to
Produce
550
15,000
35,950
25,000
550
3,000
30,450
15,000
5,000
30,000
15,000
5,000
25,000
---
9,000
7,000
86,000
10,000
96,000
4,600
SVU(AA2EM) – SEP./OCT. 2014
d) A debenture issued at Rs.105, repayable at Rs.100
Note: The face value of each debenture is Rs.100.
21
SRI VENKATESWARA UNIVERSITY
II B.Com. DEGREE EXAMINATION, MARCH 2013
(354) – ADVANCED ACCOUNTING
Time : 3 Hours]
[Max.: 70 Marks
SECTION – A (5  2 = 10 Marks)
Answer any FIVE questions. Each question carries 2 marks
1. a) What is short workings ?
b) Explain down payment.
c) Discuss the need for branch accounts.
d) Features of deficiency account.
e) Narrate the features of income and expenditure account.
f) What is net worth ?
g) Explain the features of fluctuating capital A/cs.
h) Explain the need for allowing interest on capital.
i) What is forfeiture of shares ?
j) Explain the features of sinking fund investment account.
SECTION – B (5  12 = 60 Marks)
Answer ONE question from each unit
UNIT - I
2. The following details are extracted from the records of Pavani coal mines.
You are required to prepare land lord account, Royaty account, minimum rent
account and short workings account.
Years
2008
2009
2010
2011
Output 4,000 tons 28,000 tons 30,000 tons 46,000 ton
Royalty : Rs.5 per tonne
Minimum Rent Rs.1,70,000 per annum
Short workings are recouped with in three years.
3. A Road transport company purchased AC super luxury bus on 1.4.2008 on
installment basis at cost price of Rs.18,60,000. From Toyoto Co.Ltd. on the same
day Rs.5,97,000 was paid towards down payment. It was agreed to pay annual
installment of Rs.6 lakh for 3 years. Interest was charged at 15% per annum.
Road Transport Co. charging depreciation at 15% per annum on diminishing
value. The books of accounts are closed on 31st March every year.
You are required to prepare AC super luxury bus account, Interest
suspense account, interest account, Toyoto Co. Ltd., Depreciation Account and
profit and loss account. For 3 year period commencing from 1.4.2008.
UNIT - II
4. Bharathi stores of Bangalore had a branch at Thirupati. Goods are sent to
branch at cost plus 25%. The branch is depositing every day collections in the
Bank account of Head office. All expenses are paid by Head office by cheque
SVU(AA2EM) – MARCH/APRIL 2013
22
excepting petty expenses. Which are paid by branch office manager. The following
details are available as on 31st March 2012.
Rs
Stock (invoiced price on 1.4.2011)
82,000
Debtors (as on 1.4.2011)
31,700
Stock (Invoiced price on 31.3.2012)
96,000
Debtors (as on 31.3.2012)
42,150
Furniture (as on 1.4.2011)
23,400
Cash sales
4,01,300
Credit sales
3,72,100
Good invoiced by HO to branch
6,28,000
Furniture purchased as 1.10.2011
2,500
(Payment made by branch mangager out of cash sales and debtors collection)
Expenses paid by HO
1,32,000
Petty expenses paid by branch
10,450
Charge depreciation on furniture at 10% p.a. on diminishing balance
method.
You are required to prepare branch account in the books of head office as
on 31st March 2012.
5. Ram Pratap filed a petition for insolvency on 31st March 2012. The details
available from his records as on that date is as follows.
 Sundry debtors : Goods Rs.2,500; Doubtful Rs.15,000 (Estimated to
produce Rs. 12,500) Rs.7,500 Bad.
 1000 shares in ABC Electronic Co. Ltd. (Estimated to produce Rs.7,500)
Rs.12,500 loss in betting Rs.1,000.
 Shares in XYZ Co. Ltd. (Estimated to realize 37,500) Rs.45,750 creditors
Rs.42,800.
 Creditors holding second charge as shares of XYZ Co. to the extent of
Rs.12,500, Rs.15,000.
 Creditors holding first charge on shares of XYZ Co. Ltd. Rs.20,000 Bills
payable Rs.2,000.
 Creditors for rent, taxes, wages (of which Rs.2,300 is preferential) Rs.2,500
 Furniture (Estimated to realize Rs.1,500) Rs.7,500
 Cash at bank Rs.275
 Stock (Estimated to realize Rs.15,225) Rs.17,975.
 Bills receivable (Estimated to realize Rs.3,500) Rs.4,500.
 He commenced with capital of Rs.35,000 on 1.4.2009.
Business resulted in profit of Rs.6,150 and Rs.6,800 for first two years
respectively and loss of Rs.4,250 in the 3rd year, after allowing Rs.3,500 towards
interest on capital every year. Total with drawals for the entire period Rs.22,000.
Prepare deficiency account and statement of affairs account from the above data.
UNIT - III
6. The receipts and payments account of Lakshman cricket club for the year
ending 31.12.2012 is as follows :
Rs
Rs
SVU(AAEM) – MARCH 2010
Dr
Date
Particulars
2007 To Land Lord
2008 To Land Lord
95
Minimum Rent A/c
Rs.
Date
Particulars
7,500 2007 By Royalty
By Short Workings A/c
7,500
7,500 2008 By Royalty
By Short Workings A/c
7,500
Dr
Date
Particulars
2007 To Minimum Rent A/c
2008 To Minimum Rent A/c
2009 To Land Lord A/c
To Short Workings A/c
Royalty A/c
Rs.
Date
4,000 2007
6,500 2008
7,500 2009
3,000
10,500
10,500 2010
2010 To Land Lord A/c
Dr
Date
2007
2008
2009
2010
Particulars
To Bank A/c
To Bank A/c
To Bank A/c
To Bank A/c
Rs.
7,500
7,500
7,500
10,500
Particulars
By Profit & Loss A/c
By Profit & Loss A/c
By Profit & Loss A/c
Cr
Rs.
4,000
6,500
10,500
By Profit & Loss A/c
10,500
10,500
Land Lord A/c
Date
Particulars
2007 By Minimum Rent A/c
2008 By Minimum Rent A/c
2009 By Royalty A/c
2010 By Royalty A/c
Dr
Date
Particulars
2007 To Minimum Rent A/c
2008 To Balance b/d
To Minimum Rent A/c
2009
3.
Dr
Date
1.1.05
1.1.06
1.1.07
Short Workings A/c
Rs.
Date
Particulars
3,500 2007 By Balance c/d
3,500 2008 By Balance c/d
1,000
4,500
To Balance b/d
4,500 2009 By Royalty A/c
By Profit & Loss A/c
4,500
Ledgers in the books of Manasa Electronic Company
Motor Van A/c
Particulars
Rs.
Date
Particulars
To Abhilash A/c
1,12,000 31.12.05 By Depreciation A/c
By Balance c/d
1,12,000
To Balance b/d
89,600 31.12.06 By Depreciation A/c
By Balance c/d
89,600
To Balance b/d
71,680 31.12.07 By Depreciation A/c
By Balance c/d
71,680
Dr
Date
1.1.05
Particulars
To Cash A/c
Rs.
30,000
Cr
Rs.
4,000
3,500
7,500
6,500
1,000
7,500
Abhilash A/c
Date
Particulars
1.1.05 By Motor Car
Cr
Rs.
7,500
7,500
7,500
10,500
Cr
Rs.
3,500
4,500
4,500
3,000
1,500
4,500
Cr
Rs.
22,400
89,600
1,12,000
17,920
71,680
89,600
14,336
57,344
71,680
Cr
Rs.
1,12,000
SVU(AAEM) – MARCH 2010
94
Rs.425; Goodwill of the firm was valued at Rs.3,000. She was paid Rs.5,525 in cash on
retirement and balance in three equal instalments with interest at 5% per annum.
You are required to prepare Revaluation account, Capital and Loan account of Sushmita.
UNIT – V
10. Meera Madhuri Co. Ltd., Registered with Rs.5,00,000 share capital divided into 50,000
equity shares of Rs.10 each. The company issued 15,000 equity shares of Rs.10 each to the
vendor of Machinery purchased exclusively for the business of the company. The company also
issued 35,000 equity shares of Rs.10 each to the general public. Only 30,000 equity shares
applications were received before the due date and all accepted. The amount payable as shown
are as follows :
On application Rs.5 per share
On Allotment, Rs.3 per share
On 1st and Final call, Rs.2 per share
A holder Mr.Ramji having 1,000 shares paid first and final call amount alongwith allotment
money. Mr.Ravindra failed to pay the allotment and first and final call money on his 100 shares.
The company forfeited those shares and reissued at Rs.8 per share. You are required to pass
Necessary journal entries and show relevant items in the Balance Sheet.
11. Seven Hills Co. Ltd., issued 1,000 – 10% debentures at Rs.100 each
Pass Necessary journal entries in the following cases :
a) Issued at Rs.95 repayable at Rs.100 each
b) Issued at Rs.95 repayable at Rs.105 each
c) Issued at Rs.100 repayable at Rs.105 each
d) Issued at Rs.105 repayable at Rs.100 each.
SolutionS – SVU(AAEM) – MARCH 2010
SECTION – A
1. a) Define Fixed Rent
: Refer QNo.49, Page 35
b) Differentiate between Hire Purchase and Instalment Systems.
Ans: Refer QNo.8, Page 6
c) Define Invoice Price : When the goods are sent by the head office to the branch at
invoice price, i.e., cost plus some percentage of profit, the branch manager is required to sell the
goods at invoice price only. Goods are marked on invoice price to achieve the following
objectives: (i) In order to keep secret from the branch manager the cost price of the goods and
profit made, so that the branch manager may not start a rival and competitive business with the
concern; and (ii) In order to have effective control on stock i.e., stock at any time must be equal
to opening stock plus goods received from head office minus sales made at the branch.
d) Who are Preferential creditors?
: Refer QNo.70, Page 44
e) What is statement of affairs?
: Refer QNo.4 (1st Para only), Page 3
f) Define Single-Entry
: Refer QNo.1, Page 1
g) Define Partnership deed.
: Refer QNo.16(1st Para Only), Page 13
h) Identify the contents in Revaluation A/c
: Refer QNo.83 Page 52
i) Define Capital Reserve : After reissue of all forfeited shares if there is no balance in
shares forfeited account, then there will be no capital profit. But where there is profit on the
reissue of forfeited shares., i.e., shares forfeited account is showing credit balance after reissue
of all forfeited shares, such profit should be treated as capital profit and the balance relating to
shares reissued will be transferred to capital reserve by passing the following entry.
Shares Forfeited A/c
Dr xxx
To Capital Reserve A/c
xxx
Capital reserve will be shown on the liabilities side of the Balance Sheet and can be used for
writing off capital losses.
j) Differentiate between Share and Debenture : Refer QNo.30, Page 26
SECTION – B
2.
SVU(AA2EM) – MARCH/APRIL 2013
23
Cash in hand
150 Salaries
12,000
Cash at bank
14,200 Sports equipment
46,785
Subscriptions
61,100 Stationary and printing 1,220
Admission fee
350 Ground maintenance 6,000
Interest as investment @ 9% per annum 9,000 Prizes
1,060
Cash in hand
380
Cash in bank
17,355
84,800
84,800
The additional information:
1.4.2011 (Rs) 31.3.2012 (Rs)
a) Subscriptions due
480
560
b) Subscription received in advance
80
40
c) Sports equipment
21,800
29,700
d) Land and buildings (cost less depreciation)
80,000
76,000
You are required to prepare income and expenditure account and balance
sheet for the year ending 31st March 2012.
7. Shri Harinath keeps his books under single entry system. The following
information was extracted from the records regarding his financial position.
Particulars
31.3.2011 (Rs)
31.3.2012 (Rs)
Bills payable
2,000
Creditors
3,310
8,700
Stock
12,000
13,400
Debtors
6,600
9,320
Cash at bank
6,710
3,000
Machinery
15,000
15,000
Motor cycle
12,000
Cash in hand
5,930
Additional information:
a) Personal drawings Rs.4,500 for household expenditure.
b) A motor cycle was purchased for Rs.12,000 for business use.
c) Write off Rs.400 as bad debt and create reserve for doubtful debts at 5%
on debtors.
d) Charge depreciation: on machinery at 8% p.a. and on motor cycle at 10% p.a.
Prepare statement showing net profit and statement of affairs on 31.3.2012.
UNIT - IV
8. Siva Rama and Krishna are equal partners in a firm. The firm's Balance
sheet as on 31st March 2012 is as follows:
Rs
Rs
Sundry creditors
19,000 Cash at bank
2,000
Bills payable
5,000 Sundry debtors
16,000
General reserve
9,000 Stock
25,000
Profit and loss account
3,000 Furniture
8,000
Capital account
Machinery, Plant
35,000
Siva
40,000 Buildings
45,000
SVU(AA2EM) – MARCH/APRIL 2013
24
Rama
30,000
Krishna
25,000
1,31,000
1,31,000
On 1.4.2012, Rama retires from the firm, subject to the following conditions.
a) The goodwill of the firm valued at Rs.18,000
b) Plant and furniture to be depreciated by 10% and stock by 20%
c) Buildings was appreciated by 10 percent
d) A provision of 5% on sundry debtors to be created towards bad and
doubtful debts
e) The future profit and loss sharing ratio between Siva and Krishna is 3:2
You are required to prepare necessary ledger accounts and balance sheet
of the firm after the retirement of existing partner Rama.
9. Soori, Hari and Gopi a re partners in a firm sharing profits in the ratio of 3/4 :
1/8 : 1/8 respectively. The balance sheet of the firm as on 31.3.2010 is on follows:
Rs
Rs
Sundry
15,000 Cash in hand
5,000
Bank overdraft
6,000 Cash at bank
20,000
Bills payable
4,000 Debtors
30,000
Capital accounts
Bills receivable
5,000
Soori
50,000 Stock
20,000
Hari
30,000 Machinery
50,000
Gopi
25,000
1,30,000
1,30,000
Gopi died on .31st December 2010 and the provision as per the
partnership deed the legal heir of the deceased entitled to the following items:
a) Share in profits upto the data of death, calculate on the previous year's profit
b) Share of goodwill of the firm calculated on the basis of 3 years purchase
average profits of the last 4 years.
Rs
31.3.2007 80,000
31.3.2008 60,000
31.3.2009 40,000
31.3.2010 20,000
c) The total drawings of gopi till the date of death Rs.1,800
d) Charge interest on capital and interest on drawings at the rate of 10% and
4% respectively.
You are required to prepare legal heir of the deceased Sri Gopi account
on the date of his death.
UNIT - V
10. Madhav Co. Ltd. having a nominal capital of Rs.20,00,000, divided into
20,000 equity shares of Rs.100 each. The company invited applications for 10,000
equity share of Rs.100 each at a discount of 5%.
The amount payable is on follows: on application Rs.25 per share; on
allotment Rs.35 per share and on first and final call Rs.35 per share.
SVU(AAEM) – MARCH 2010
93
1.7.2008 30.6.2009
Closing Stock
40,000 60,000
Debtors
30,000 40,000
Cash in hand
2,000
1,000
Bank Balance
10,000
5,000 OD
Creditors
15,000 25,000
Outstanding Expenses 5,000
8,000
Furniture (Cost price)
3,000
2,000
Additional Information :
a) Drawings during the year Rs.12,000
b) Additional capital introduced, Rs.2,000
c) Furniture costing Rs.1,000 was sold for Rs.5,000 on 1-7-08
d) Depreciate furniture by 10% per annum.
You are required to prepare (i) Statement showing the trading and net profit for the year
ending 30.6.2009 and (ii) Statement of affairs as on that date.
UNIT – IV
8. Soori an Hari are partners in a firm, showing profits in the ratio of 1:1. The balance
sheet as on 31st December, 2009 was as follows :
Liabilities
Rs.
Assets
Rs.
Creditors
2,500 Cash in hand & at bank
14,000
Bills Payable
1,000 Debtors
29,000
Outstanding expenses
500 Stock
17,000
Soori Capital Account
50,000 Investments
11,000
Hari Capital Account
50,000 Furniture
1,000
Motor Van
9,500
Plant
13,400
Buildings
9,100
1,04,000
1,04,000
They have decided to admit Giri as a new partner with 1/5 share in profits on 1st
January 2010, subject to the following conditions :
a) Giri should being Rs.10,000 on capital and Rs.8,000 towards goodwill, retained in the
business.
b) Depreciation on stock by 10%; reduce investments to Rs.10,000; Furniture, Motor Van and
Plant by 5%; Buildings were valued at Rs.15,000 and create Reserve for doubtful debts at
5% on Debtors.
You are required to prepare Revaluation Account, Partner's Capital Accounts and Balance
Sheet as on 1st January 201 after admission of new partner Giri.
9. Sushmita, Sirisha and Sailaja are partners showing profits in the ratio of 12 , 13 and
1
6
respectively. The Balance Sheet as on 30th June, 2006 was as follows :
Liabilities
Bills Payable
Creditors
Profit & Loss A/c
Sushmita Capital A/c
Sirisha Capital A/c
Sailaja Capital A/c
Rs.
3,200
6,250
2,250
20,000
12,500
10,000
Assets
Cash at Bank
Bills Receivable
Debtors
Stock
Furniture
Machinery
Buildings
Rs.
12,825
12,750
8,900
11,150
1,700
4,875
12,000
54,200
54,200
Sushmita retires from business on 1st July, 2006. The assets were revalued on : Stock
Rs.10,000; Furniture Rs.1,500; Machinery Rs.4,500; Buildings Rs.10,000; Doubtful debts
SVU(AAEM) – MARCH 2010
92
Prepare Bangalore Branch Account to show the net profit for the year 2009.
5. Sri Ram Prasad finds himself insolvent on 31st December, 2009. His position was as
follows :
Debtors :Good, Rs.5,000; Doubtful Rs.30,000 (Estimated to
Rs.
produce Rs.25,000); Bad Rs.15,000.
Share in Vasavi Co. Ltd.(estimated to produce Rs.15,000)
25,000
Shares in Bangalore Co. Ltd. (estimated to produce, Rs.75,000)
91,500
Loss through betting
2,000
Creditors
85,600
Creditors holding second change on shares (in Bangalore Co. Ltd.
to the extent of Rs.25,000)
30,000
Creditors holding first change on shares in Bangalore Co. Ltd.
40,000
Bills Payable
8,000
Creditors for rent, rate, taxes, wages (of which Rs.4,600 are preferential) 5,000
Furniture (Estimated to realize, Rs.3,000)
15,000
Cash in hand and at bank
550
Stock in trade (Estimated to realise, Rs.30,450)
35,950
Bills Receivable (Estimated to realise, Rs.7,000)
9,000
He started with a capital of Rs.70,000 on 1st January 2007. The business resulted in a
profit of Rs.8,800 and Rs.10,100 for first and second years respectively and a loss of Rs.5,000 in
third year, after allowing Rs.3,500 as interest on capital each year. The total drawings amounted
to Rs.30,000.
Prepare Deficiency Account and Statement of affairs as on 31st December, 2009.
UNIT – III
6. The following Receipts and Payments Account relates to Kurnool Tennis Club for the
year ending 31st December, 2009 :
Receipts
Rs.
Payments
Rs.
To Balance b/d
2,000 By New Building
40,000
To Donations
50,000 By Secretary Honorarium
1,000
To Entrance fee
3,000 By 8% Bonds (purchased on 1.7.09) 16,000
To Tennis Tournament Fund
9,000 By Printing
200
To Subscriptions (Incl. Rs.600 for 2010) 5,100 By Insurance (year ending 30.9.2010) 360
To Locker Rent
300 By Tennis Tournament Expenses
900
To Miscellaneous Receipts
1,300 By Postage
25
By Sundry Expenses
475
By Repairs to Tennis Court
750
By Tennis Balls
2,000
By Salaries, wages
2,800
By Furniture
2,000
By Balance c/d:
Cash in hand
400
Cash at bank
3,790
70,700
70,700
Additional Information :
a) Subscriptions outstanding : 31.12.08 Rs.350; 31.12.09 Rs.500.
b) Salaries Outstanding : 31.12.08 Rs.600; 31.12.09 Rs.450.
c) Interest on bonds outstanding for the current year
d) Stock of Tennis balls 31.12.09 Rs.400
e) Provide Depreciation : On New buildings @2.5% p.a. and on Furniture @5% p.a.
f) All donations and half of the entrance fee to be capitalized.
Prepare Income and Expenditure Account and Balance Sheet as on 31.12.2009
7. Mr. Gowtham, a trade kept his books under single-entry system. The following details
are available :
SVU(AA2EM) – MARCH/APRIL 2013
25
Applications were received for 9000 shares and all these were accepted. All the
money due was received except the first and final call 100 shares which were
forfeited. Subsequently, 60 shares of forfeiture shares were reissued at Rs.90 as
fully paid.
Pass necessary journal entries to record these transaction in the books of
Madhav Co. Ltd.
11. Pass journal entries in the books of a company, in the following cases,
regarding debentures issue and redemption.
a) 4000, 6% _debentures of Rs.100 each issued at par and redeemed at par
b) 3500, 5% debentures of Rs.100 each issued at 5% premium and
redeemed at par.
c) 2500, 8% debentures of Rs.100 each, issued at 5% discount and
redeemed at 4% premium.
d) 3000, 6% debentures of Rs.100 each, issued at 5% discount and
redeemed at par
e) 4500, 6% debentures of Rs.100 each, issued at par and redeemed at 5%
premium.
SVU(AA2EM) – MARCH/APRIL 2013
Dr
Land Lord A/c
Year Particulars
Rs
Year
Particulars
2008 To Bank
1,70,000 2008 By Minimum Rent
1,70,000
2009 To Bank
1,70,000 2009 By Minimum Rent
1,70,000
2010 To Bank
1,70,000 2010 By Minimum Rent
1,70,000
2011 To Bank
2,30,000 2011 By Royalty A/c
2,30,000
SOLUTIONS –SVU (AA3 EM) – MARCH 2013
SECTION – A
1.a) Refer Q.No.50, Page No. 35.
b) It is the price which is paid by the hire purchaser to the vendor at the time
of agreement and taking the possession of the goods.
c) Refer Q.No. 59, Page No. 41
d) Refer Q.No.71, Page No. 44
e) Refer Q.No.83, Page No. 49.
f) Refer Q.No. 1(f) in March 2012.
g) Refer Q.No.91, Page No. 51.
h) Interest on capital allowed to partners as per agreement. The interest on
capital should be charged and credited to the partner's capital account. The
interest on capital charged for show the differentiation of partner's capital
accounts. The entry is.
Interest on capital A/c
Dr 
To Partner's capital A/c

i) Refer Q.No. 108, Page No. 56
j) Refer Q.No. 114, Page No. 58.
SECTION – B :: UNIT – I
2.
Analytical Table
Year Production Royalty Min
Short
S.W
S.W.Not
Payment
Rent Working Recouped Recouped (P&L A/c)
2008
4,000 20,000 1,70,000 1,50,000
1,70,000
2009
28,000 1,40,000 1,70,000 30,000
1,70,000
2010
30,000 1,50,000 1,70,000 20,000
2,00,000
1,70,000
2011
46,000 2,30,000 1,70,000
2,30,000
2010 To Minimum Rent
Dr
Year
Particulars
2008 To Minimum Rent
2009 To Minimum Rent
2011 To Land Lord
Dr
Year
Particulars
2008 To Land Lord A/c
2009 To Land Lord A/c
2010 To Land Lord A/c
Dr
Year
Particulars
2008 To Minimum Rent
2009 To Balance b/d
To Minimum Rent
2010 To Balance b/d
To Minimum Rent
26
Cr
Rs
1,70,000
1,70,000
1,70,000
1,70,000
1,70,000
1,70,000
2,30,000
2,30,000
Royalty A/c
Rs
Year
Particulars
20,000 2008 By Production A/c
20,000
1,40,000 2009 By Production A/c
1,40,000
1,50,000 2010 By Production A/c
1,50,000
2,30,000 2011 By Production A/c
2,30,000
Cr
Rs
20,000
20,000
1,40,000
1,40,000
1,50,000
1,50,000
2,30,000
2,30,000
Minimum Rent A/c
Rs
Year
Particulars
1,70,000 2008 By Royalty A/c
By Short workings A/c
1,70,000
1,70,000 2009 By Royalty A/c
By Short workings
1,70,000
1,70,000 2010 By Royalty A/c
By Short working A/c
1,70,000
Cr
Rs
20,000
1,50,000
1,70,000
1,40,000
30,000
1,70,000
1,50,000
20,000
1,70,000
Short Working A/c
Rs
Year
Particulars
1,50,000 2008 By Balance c/d
1,50,000
1,50,000 2009 By Balance c/d
30,000
1,80,000
1,80,000 2010 By P & LA/c
20,000
Cr
Rs
1,50,000
1,50,000
1,80,000
1,80,000
2,00,000
SVU(AAEM) – MARCH 2010
91
SRI VENKATESWARA UNIVERSITY
II B.COM EXAMINATIONS, MARCH 2010
354 – ADVANCED ACCOUNTING
Time : 3 Hr]
SVU(AA2EM) – AUGUST 2011
11.
Dr
Date
Particulars
31.12.04 To Balance c/d
[Max. Marks : 70
SECTION – A (52 = 10 Marks)
Answer any FIVE questions. Each question carries 2 marks
1. a) Define Fixed Rent
b) Differentiate between Hire Purchase and Instalment Systems
c) Define Invoice Price
d) Who are Preferential creditors?
e) What is statement of affairs?
f) Define Single-Entry
g) Define Partnership deed.
h) Identify the contents in Revaluation A/c
i) Define Capital Reserve
j) Differentiate between Share and Debenture.
SECTION – B (5  12 = 60 Marks)
Answer any FIVE questions, choosing ONE from each Unit
Each question carries 12 marks
UNIT – I
2. Ratna Coal Co. Ltd., leased a colliery on 1st January 2007 at a minimum rent of
Rs.7,500, merging into a royalty of Re.1.00 per ton of output the short-workings are recouped
over the first three years of the lease. The output for the first four years, viz., 2007, 2008, 2009
and 2010 was 4,000 tons, 6,500 tons, 10,500 tons and 9,000 tons respectively. Show Minimum
rent account, Royalty account, Landlord Account and Short workings account.
3. Manasa Electronic Co. Purchased a Motor Van from Abhilash on Jan 1, 2005 on hire
purchase system. The cash price of the van was Rs.1,12,000 and the payment was made as
follows :
Rs.30,000 on signing the agreement and the balance in three yearly instalments of
Rs.30,000 each. 5% p.a. interest was charged by the vendor. Charge depreciation on van at
20% p.a. on diminishing balance method. Prepare Motor Van account, Abhilash account and
Interest account in the books of Manasa Electronic Co.
UNIT – II
4. Virinchi Technologies of Hyderabad is having a branch at Bangalore. The particulars
relating to the branch as on 31st December 2009 was as follows :
Rs.
Stock at the branch as on 1-1-09
22,500
Debtors at the branch, as on 1-1-09
45,000
Petty cash at the branch as on 1-1-09
450
Goods sent to branch during the year
3,78,000
Credit sales during the year
3,42,000
Remittances from the branch:
For cash sales
90,000
Received from debtors
3,15,000 4,05,000
Cheques sent to the branch during the year:
For Salaries
13,500
For Rent & Taxes
2,300
Fro Petty cash
1,700 17,500
Stock at the branch, as on 31.12.09
37,500
Goods returned by the branch
3,000
Debtors as on 31.12.09
72,000
Petty cash as on 31.12.09
300
31.12.05
31.12.05
31.12.06
31.12.07
Debenture Redemption fund A/c
Amount Date
Particulars
4,748.97 31.12.04 By Profit & Loss appropriation A/c
4,748.97
To Balance c/d
9,687.90 1.1.05 By Balance b/d
By Profit & loss appropriation A/c
By Interest A/c
9,687.90
To Balance c/d
14,824.39 1.1.06 By Balance b/d
By Profit & loss appropriation A/c
By Interest A/c
14,824.39
To Balance c/d
20,166.32 1.1.07 By Balance b/d
By Profit & loss appropriation A/c
By Interest A/c
20,166.32
To Balance c/d
25,721.93 1.1.08 By Balance b/d
By Profit & loss appropriation A/c
By Interest A/c
25,721.93
To General Reserve 31,500.00
By Balance b/d
To P & L A/c
5,777.78
By Profit & loss appropriation A/c
By Interest A/c
By Sinking fund investment
37,277.78
Dr
Date
1.4.04
Particulars
To Bank
1.4.05
31.12.06
To Balance b/d
To Bank
1.1.06
31.12.06
To Balance b/d
To Bank
1.1.07
31.12.07
To Balance b/d
To Bank
1.1.08
To Balance b/d
To Bank
1.1.09
To Balance b/d
To Bank
Sinking Fund Investment A/c
Amount
Date
Particulars
4,749 31.12.04 By Balance c/d
4,749
4,749 31.12.05 By Balance c/d
4,939
9,688
9,688 31.12.06 By Balance c/d
5,136
14,824
14,824 31.12.07 By Balance c/d
5,342
20,166
20,166 31.12.08 By Balance c/d
5,556
25,722
25,722 31.12.09 By Balance c/d
5,778
31,500
90
Cr
Amount
4,748.97
4,748.97
4,748.97
4,748.97
189.96
9,687.90
9,687.90
4,748.97
387.52
14,824.39
14,824.39
4,748.97
592.96
20,166.32
20,166.32
4,748.97
806.64
25,721.93
25,721.93
4,748.97
1,028.88
5,778.00
37,277.78
Cr
Amount
4,749
4,749
9,688
9,688
14,824
14,824
20,166
20,166
25,722
25,722
31,500
31,500
SVU(AA2EM) – MARCH/APRIL 2013
27
2,00,000
2,00,000
3.
Analytical Table
No.of Installments Cash price Interest Principle Instalment (Rs)
18,60,000
1.4.08 Down payment 5,97,000
-5,97,000
5,97,000
12,63,000
31.03.09
4,10,550 1,89,450 4,10,550
6,00,000
8,52,450
31.03.10
4,72,132 1,27,868 4.72,132
6,00,000
3,80,318
31.03.11
3,80,318 2,19,682 3,80,318
6,00,000
--- 5,37,000 18,60,000
23,97,000
Dr
Date
Particulars
1.4.08 To Toyoto Co.
1.4.09 To Balance b/d
1.4.10 To Balance b/d
1.4.11 To Balance b/d
Dr
Date
Particulars
1.4.08 To Toyoto Co.
1.4.09 To Balance b/d
1.4.10 To Balance b/d
AC Super Luxury Bus A/c
Rs
Date
Particulars
18,60,000 31.3.09 By Depreciation
(18,60,00015/100)
By Balance c/d
18,60,000
15,81,000 31.3.10 By Depreciation
(15,81,00015/100)
By Balance c/d
15,81,000
13,43,850 31.3.11 By Depreciation
(13,43,85015/100)
By Balance c/d
13,43,850
11,42,272
Interest Suspense A/c
Rs
Date
Particulars
5,37,000 31.3.09 By Interest
By Balance c/d
5,37,000
3,47,550 31.3.10 By Interest
By Balance c/d
3,47,550
2,19,682 31.3.11 By Interest
2,19,682
Dr
Interest A/c
Date
Particulars
Rs
Date Particulars
31.3.09 To Interest suspense A/c 1,89,450 31.3.09 By P & L A/c
1,89,450
Cr
Rs
2,79,000
15,81,000
18,60,000
2,37,150
13,43,850
15,81,000
2,01,578
11,42,272
13,43,850
Cr
Rs
1,89,450
3,47,550
5,37,000
1,27,868
2,19,682
3,47,550
2,19,682
2,19,682
Cr
Rs
1,89,450
1,89,450
SVU(AA2EM) – MARCH/APRIL 2013
31.2.10 To Interest suspense A/c 1,27,868 31.3.10 By P & L A/c
1,27,868
31.3.11 To Interest suspense A/c 2,19,682 31.3.11 By P & L A/c
2,19,682
28
1,27,868
1,27,868
2,19,682
2,19,682
Dr
Toyoto Co.Ltd.A/c
Date
Particulars
Rs
Date
Particulars
1.4.08 To Bank A/c
5,97,000 1.4.08 By AC Super Luxury bus A/c
31.3.09 To Bank A/c
6,00,000
By Interest suspense A/c
To Balance c/d 12,00,000
23,97,000
31.12.10 To Bank A/c
6,00,000 1.4.09 By Balance b/d
31.12.10 To Balance c/d 6,00,000
12,00,000
31.03.11 To Bank A/c
6,00,000 1.4.09 By Balance b/d
6,00,000
Cr
Rs
18,60,000
5,37,000
Dr
Depreciation A/c
Date
Particulars
Rs
Date Particulars
31.3.09 To AC super luxury bus
2,79,000 31.3.09 By P& L A/c
2,79,000
31.3.10 To AC super luxury bus
2,37,150 31.3.10 By P & L A/c
2,37,150
31.3.11 To AC super luxury bus
2,01,578 31.3.11 By P& L A/c
2,01,578
Dr
Profit & Loss A/c
Rs.
Date
1,89,450
2,79,000
Date
31.3.09
Particulars
To Interest
To Depreciation
31.3.10
To Interest
To Depreciation
1,27,868
2,37,150
31.3.11
To Interest
To Depreciation
2,19,682
2,01,578
23,97,000
12,00,000
12,00,000
6,00,000
6,00,000
Cr
Rs
2,79,000
2,79,000
2,37,150
2,37,150
2,01,578
2,01,578
Cr
Particulars
Rs.
UNIT – II
Dr
4.
Particulars
To Branch stock
To Branch debtor
To Furniture
Branch A/c
Rs
Particulars
82,000 By Bank
31,700 Cash sales
23,400 Collection from
Cr
Rs
4,01,300
3,61,650
SVU(AA2EM) – AUGUST 2011
To Realization
89
41,000 By Realization A/c
By Meena capital
By Deepa capital
By Keerthi capital
42,850
25,200
10,212
4,059
3,154
42,850
To Krishna capital
To Goodwill
10.
Dr
Partners Capital A/c's
Siva Rama Krishna
Particulars
2,000 1,000
--- By Balance b/d
6,000 3,000
By Cash A/c
35,033 22,070 15,000 By Goodwill A/c
By Reserve
By Revaluation
43,033 26,017 15,000
22,500
22,500
22,500
22,500
33,750
22,500
11,250
Liabilities
Creditors
Siva capital
Rama capital
Krishna capital
33,750
33,750
67,500
67,500
66,000
66,000
1,000
1,500
2,000
500
Balance Sheet at Lavanya Co. Ltd. as on….
Liabilities
Amount
Assets
I Equity Share capital
Authorized capital 8000 shares of Rs.25 each
2,00,000 Bank
Issued, Subscribed, called up and paid-up capital
1,12,500
4,500 shares of Rs.25 each
II Reserves and Surplus
Share premium
11,250
Capital Reserve
500
1,24,250
2,500
500
Particulars
To Stock A/c
To Debtors A/c
To Investment A/c
To Furniture A/c
To Buildings A/c
To Bank A/c (Expenses)
To Bank A/c (Creditors)
Dr
1,24,250
Particulars
To Realization
To Realization
To Bank A/c
Realization A/c
Amount
Particulars
10,050 By Creditors A/c
31,300 By Meena capital A/c
8,000 By Deepa capital A/c
3,250 By Keerathi capital A/c
11,750 By Bank A/c
225 By Loss :
25,200 Meena capital A/c
Deepa capital A/c
Keerthi capital A/c
89,755
Partners Capital A/c's
Meena Deepa Keerthi
Particulars
1,288
858
429 By Balance b/d
9,000
8,750
3,250 By Reserve
10,212
4,059
3,154
20,500 13,667
6,833
Dr
1,24,250
Cr
Siva Rama Kirshna
27,000 18,000
------- 15,000
4,000 2,000
--10,000 5,000
--2,033 1,017
--43,033 26,017 15,000
Amount
36,250
13,300
4,000
23,000
37,500
2,000
1,16,050
9.
500
Amount
1,000
36,250
39,250
Balance Sheet of Siva, Rama & Krishna as on 31.12.2009
Amount
Assets
44,000 Cash in hand
35,033 Debtors
14,750
22,017 (-) Bad debts
750
15,000
14,000
(-) RBDD
700
Bills Receivable
Stock
Land & Building
(30,000+7,500)
Furniture
1,16,050
Dr
2,500
88
15,000 By Rama capital
6,000 By Balance c/d
39,250
Particulars
To Cash
To Profit & Loss A/c
To Balance c/d
UNIT-V
Journal Entries in the Book of Lavanya Co. Ltd.
Bank A/c
Dr
To Equity Share application A/c
(Being application money received)
Equity Share Application A/c
To Equity Share capital A/c
(Being application money transferred of equity share capital A/c)
Equity Share allotment
Dr
To Equity Share capital
To Share Premium A/c
(Being Money due on allotment)
Bank A/c
Dr
To Equity Share allotment
(Being allotment Money received)
Equity Share first and final call A/c
Dr
To Equity share capital A/c
(Being First & final call Money due)
Bank A/c
Dr
To Equity share first and final call A/c
(Being First and Final call money received)
Share capital A/c (10025)
Dr
To Share forfeiture A/c (10010)
To Share first and final Call A/c
(Being share are forfeiture)
Bank A/c (10020)
Dr
Share forfeiture A/c
Dr
To Share capital A/c(10025)
(Being shares were reissued)
Share forfeiture A/c
Dr
To Capital Reserve A/c
(Being forfeited amount capital reserve)
SVU(AA2EM) – AUGUST 2011
Particulars
To Balance b/d
Bank A/c
Amount
Particulars
1,850 By Realization exp
Cr
Amount
25,200
9,000
8,750
3,250
41,000
1,288
858
429
89,755
Cr
Meena Deepa Keerthi
15,000 10,000
5,000
5,500
3,667
1,833
20,500
13,667
6,833
Cr
Amount
225
SVU(AA2EM) – MARCH/APRIL 2013
29
To Goods sent to Branch 6,28,000
7,62,950
To Bank (Expenses)
1,32,000 (-) Petty Expenses
10,450 7,52,500
To Furniture (1.10.11)
2,500 By Goods sent to Branch
To Stock Reserve
1,25,600
(6,28,00025/125)
19,200 By Stock Reserve
(96,00025/125)
16,400
(82,00025/125)
By Furniture
23,400
(-) Depreciation
2,340 21,060
Furniture 1.10.11
2,500
(-) Depreciation
125
2,375
(2,50010/1006/12)
By Branch debtors
42,150
To Profit & Loss A/c
1,37,285 By Branch stock
96,000
10,56,085
10,56,085
Branch Debtors A/c
Cr
Rs
Particulars
Rs
31,700 By Cash (B/ƒ)
3,61,650
3,72,100 By Balance c/d
42,150
4,03,800
4,03,800
5.
Statement of Affairs of Ram Pratap as on 31.3.2012
Gross
Liabilities
Expected
Assets
Book Expected
Liabilities
to Rank
Value to Produce
List (A) :
List (E) : Assets
45,000 Unsecured creditors
45,000 Cash to Bank
275
275
List (B) :
Stock
17,975
15,225
20,000 Fully secured creditors
20,000
Furniture
7,500
1,500
(-) security
37,500
Shares in ABC
12,500
7,500
17,500
List F : Book debts
(-) Transfer to C
12,500
Good
2,500
2,500
Surplus as per contra
5,000
Doubtful
15,000
12,500
List (C) :
Bad
7,500
-Party secured creditors
List (G) :
15,000 creditors
15,000
Bill Receivable
4,500
3,500
(-) security
12,500 2,500
67,750
43,000
List (D) :
(+) surplus as per contra
5,000
2,300 Preferential Creditors
2,300
48,000
(-) Deducted as per contra
2,300
(-) Deduction as per List D
2,300
45,700
Deficiency as Per List H
1,800
SVU(AA2EM) – MARCH/APRIL 2013
Creditors
Bills payable
Creditor for rent (2500-2300)
Dr
Particulars
To Balance b/d
To Sales
82,300
4,7500
Calculation of unsecured creditors as per list A
47,500
Rs
6.
Dr
30
42,800
2,000
200
45,000
Deficiency A/c as per List H
Particulars
Rs
Particulars
Rs
Capital
35,000 Loss in business
4,250
Profit for two years
12,950 Drawings
22,000
7,500
Interest on capital (35003) 10500 Bad debts
Deficiency as per
Doubtfull debt
2,500
Statement of affairs
1800 Loss on stock
2,750
Loss on Furniture
6,000
Loss on ABC . share
5,000
Loss on XYZ Co. share 8,250
Loss on Bills receivable 1,000
Loss through betting
1,000
60,250
60,250
UNIT – III
In come and Expenditure A/c for the Year ending 31.3.12
Cr
Expenditure
Rs
Income
Rs
To Salaries
12,000 By Subscription
61,100
To Stationary
1,220 (+) Outstanding on 31.3.12
560
To Ground maintenance
6,000
61,660
To Prizes
1,060 (+) Received in advanced on 1.4.11
80
To Dep. on Sport equipments
61,740
(21,800+46,785-29,700)
38,885 (-)Outstanding on 1.4.11
480
To Dep. on Land & Buildings 4,000
61,260
(80,000-76,000)
(-) Received in advance(31.3.12)
40 61,220
To Surplus.
7,405 By Admission fee
350
By Interest on investment
9,000
70,570
70,570
Balance sheet as on 1.4.2011
Liabilities
Rs
Assets
Rs
Subscription received
80 Cash in hand
150
Capital Fund
2,16,550 Cash at Bank
14,200
Investment (9000100/9) 1,00,000
Sports Equipment
21,800
Land & Building
80,000
Subscription Due
480
2,16,630
2,16,630
Balance sheet as on 31.3.12
Liabilities
Rs
Asset
Rs
Capital fund
2,16,550
Sport Equipment 29,700
SVU(AA2EM) – AUGUST 2011
Bill payable
Capital fund (b/f)
Liabilities
Bank overdraft
Creditors
Bills payable
Capital B/f
87
31,000 Debtors
24,645 Bills Receivable
Land and Buildings
Furniture
97,445
Statement of affairs as on 31.3.09
Amount
Assets
20,000 Cash in hand
18,600 Stock in trade
29,000 Debtors
28,380 Less : RBD (5%)
Bills Receivable
Land and Buildings
Less : Depreciation
Furniture
Less : Depreciation (5%)
95,980
Statement of Profit or Loss:
Capital as on 31.3.09
Add : Drawings 27012
Add : Interest on Drawings
Less : Additional capital
(-) Interest on Capital(24,6456/100)
Less : Capital as on 31.3.08
Profit
UNIT-IV
8.
Dr
Particulars
To Stock A/c
To Furniture A/c
To Reserve for doubtful debts A/c
To Bad debts
To Profit :
Siva Capital A/c
Rama Capital A/c
Dr
Particulars
To Siva capital
To Rama capital
Dr
Particulars
To Balance b/d
15,100
21,200
26,500
2,300
97,445
Amount
2,700
31,100
14,900
745
26,500
1,060
2,300
115
25,440
2,185
95,980
28,380
3,240
31,620
150
31,770
2,800
28,970
1,479
27,491
24,645
2,846
Revaluation A/c
Amount
Particulars
2,000 By Buildings A/c
1,000
700
750
2,033
1,017
14,155
20,400
3,050
7,500
Cr
Amount
7,500
7,500
Goodwill A/c
Rs.
Particulars
4,000 By Cash
2,000
6,000
Cr
Rs.
6,000
Cash A/c
Rs.
Particulars
18,250 By Siva capital
Cr
Rs.
2,000
6,000
SVU(AA2EM) – AUGUST 2011
2. Preferential Creditors :
Wages
300
Salaries 1,000
Taxes
800
2,100
3. Calculation of Assets realized = Total Liabilities – Deficiency
= 82,000 – 33,000 = 49,000
4. Capital = Assets – Liabilities = 92,000 – 82,000 = 10,000
UNIT-III
6.
Income and expenditure of Chittor district sports
Dr
club for the year ending 31st December 2009
Expenditure
Amount
Income
To Salaries
4,500 By Subscriptions
To Ground men fee
1,500 (-) Subscriptions for 2008
To Rent
500
To Office expenses
2,400
(+) Subscriptions for 2009
(-) Outstanding for 2008
300
2,100
(-) Subscriptions received for 2010
(+) O/s Expenses for 2009
400
2,500
To Sports equipment
By Rent of the hall
Opening
1,100
By Entrance fee
(+) Purchases
1,200
By Donations
2,300
By Sale of Grass
(-) Closing
1,300
1,000
To Dep. on Moving machine
220
(110020/100)
To Excess of Income over
Expenditure
80
10,300
Liabilities
Outstanding office expenses
Capital Fund (b/f)
Balance Sheet as on 1.1.2009
Amount
Assets
300 Cash in hand
3,950 Cash at Bank
Accrued Subscription
Sports equipment
4,250
86
Cr
Amount
5,800
900
4,900
800
5,700
200
5,500
5,500
3,000
200
1,500
100
10,300
Amount
150
2,100
900
1,100
4,250
Balance Sheet Chittoor district Sports Club as on 31.12.09
Liabilities
Amount
Assets
Amount
Capital
3,950
Moving machine
1,100
Add : Excess Income
80
Less : Depreciation
220
Over expenditure
4,030
880
880
Add : Life membership
2,000 6,030 Sports equipment
1,300
Subscription received in advance
200 Accrued subscription
800
Outstanding office expenses
400 Cash in hand
350
Cash at bank
3,300
6,630
6,630
7.
Statement of affairs as on 31.3.08
Liabilities
Amount
Assets
Amount
Bank overdraft
22,500 Cash in hand
2,675
Creditors
19,300 Stock in trade
29,670
SVU(AA2EM) – MARCH/APRIL 2013
31
(+) Surplus
7,405 2,23,955 Land & Building 76,000
Subscription received in
40 Investments
1,00,000
advance
Subscription due
560
Cash in hand
380
Cash at Bank
17,355
2,23,995
2,23,995
7.
Statement of affairs as on 31.3.2011 & 31.3.2012
Liabilities 31.3.2011 31.3.2012 Assects 31.3.11 31.3.2012
Bills payable
2,000
--- Stock
12,000 13,400
Creditors
3,310
8,700 Debtors
6,600
9,320
Capital
35,000 49,950 Cash at Bank 6,710
3,000
Machinery
15,000 15,000
Machinery
--- 12,000
Cash in hand
--5,930
40,310 58,650
40,310 58,650
Statement Showing Profit/loss
Particulars
Rs
Rs
Capital as on 31.3.12
49,950
(+) Drawings
4,500
54,450
(+) Capital as on 31.3.11
35,000
19,450
(-) Bad debts
400
446
Reserve for doubtful debts (9320-400)5/100
1,200
Depreciation on Machinery (15,0008/100)
600
2,646
Depreciation on cycle (12,00010/1006/12)
Net Profit
16,804
Note : It is Assumed that cycle was purchased at the middle of the year. So
Depreciation was calculated for six months.
Statement of Affairs as an 31.3.12
Liabilities
Rs
Assets
Rs
Creditors
8,700 Cash in hand
5,930
Capital
35,000
Cash at Bank
3,000
(+) Net profit 16,804
Stock
13,400
51,804
Debtors
9,320
(-) Drawing 4,500 47,304 (-) Baddebt
400
8,920
(-) Reserve for doubt full debt 446 8,474
Machinery
15,000
(-) Depreciation
1,200 13,800
Cycle
12,000
(-) Depreciation
600 11,400
56,004
56,004
UNIT – IV
SVU(AA2EM) – MARCH/APRIL 2013
32
8.
Dr
P & L Adjustment A/c
Cr
Particulars
RS
Particulars
RS
3,500 By Building (4500010/100)
4,500
To Plant (35,00010/100)
800 By Loss :
To Furniture (8,00010/100)
5,000
Siva capital A/c
1,866
To Stock (25,00020/100)
To Reserve for Bad debt
800
Rama capital A/c
1,867
Krishna capital A/c
1,867 5,600
(1,60005/100)
10,100
10,100
Dr
Capital Accounts
Cr
Particulars
Siva Krishna
Particulars
Siva Krishna
To P & / Adjustment A/c 1,866 1,867 By Balance b/d
40,000 25,000
To Balance c/d
48,134 33,133 By Good will
6,000 6,000
By General Reserve 3,000 3,000
By P & L A/c
1,000 1,000
50,000 35,000
50,000 35,000
Dr
Particulars
To P & L Adjustment A/c
To Rama Loan A/c
Liabilities
Creditors
Bills payable
Capitals
Siva
Krishna
Rama Loan A/c
Rama Capital A/c
Cr
RS
Particulars
RS
1,867 By Balance b/d
30,000
38,133 By Good will
6,000
By General reserve
3,000
By P & L A/c
1,000
40,000
40,000
Balance sheet
RS
Assets
RS
19,000
Cash at Bank
2,000
5,000
Debtors
16,000
(-) Reserve
800 15,200
48,134 Stock(25,000-5,000)
20,000
33,133 Furniture (8000-800)
7,200
38,133 Plant & Machinery(35000-3500)
31,500
Buildings (450001+4500)
49,500
Good will
18,000
1,43,400
1,43,400
9. Working Notes:a) Profit during Previous year = 20,000
Profit for 9months = 20,0009/12 = 15,000.
Gopi share in Profit = 15,0001/8 = 1,875.
b) Calculation Good will:
SVU(AA2EM) – AUGUST 2011
To Goods sent to Branch
To Cash-Expenses
To Stock Reserve
(360025/125)
To Profit & Loss A/c
85
58,000
9,500
From Debtor
By Good sent to Branch
By Branch & Stock
By Branch debtor
By Goods sent to Branch
58000-4,500)25/125)
By Stock Reserve
(760025/125)
720
10,100
43,000 67,000
4,500
3,600
4,800
Particulars
To Balance b/d
To Credit sales
Sundry Debtors A/c
Amount
Particulars
6,200 By Cash
46,000 By Discount
By Bad debts
By Balance c/d
52,200
I Year
1,520
92,120
Cr
Amount
43,000
2,600
1,800
4,800
52,200
III Year
IV Year
Dr
Date
Particulars
I Yr To Srinivas Engg. works A/c
II Yr To Balance b/d
III Yr
To Balance b/d
5.
Statement of affairs of a Mr. Samba Siva Rao
Gross
Expected
Liabilities
Liabilities
To Rank
Assets
92,900 List – A
List – E Assets
Unsecured creditors
89,300 Assets
List – B
List – F
Fully secured creditors
Books debtors
List – C
List – G
Portly secured creditors
Bills receivable
List – D
2,100 Preferential creditors
2,100
(-) Deduction as per List D
(-) Deduction as per contra 2,100
--(+) Deficiency as per List H
95,000
89,300
Particulars
Capital
Deficiency as per
statements Of affairs
Deficiency Account List - H
Rs.
Particulars
10,000 Loss on assets
Out standing expenses :
42,400
Wages
Salaries
Taxes
Rent and rates
Bills discounted
Private liabilities
54,200
Working Notes :
1. Unsecured Creditors :
Expected
Liabilities
82,000
Rent and Rates
700
Bill discounted
3,600
Wife loan
3,000
89,300
Gross
82,00
700
7,200
3.000
92,900
Book Expected
value To Produce
92,000
49,000
IV Yr To Balance b/d
V Yr To Balance b/d
---
---
--92,000
--49,000
2,100
46,900
42,400
89,300
Rs.
43,000
300
1,000
800
700
3,600
3,000
54,200
Dr
Date
Particulars
I Yr To Cash A/c
To Cash A/c
To Balance c/d
II Yr
To Cash A/c
To Balance c/d
III Yr To Cash A/c
To Balance
IV Yr To Cash A/c
Dr
Date
I Yr
II Yr
III Yr
IV Yr
2,000
10,000
12,000
1,500
10,000
11,500
1,000
500
5,000
10,000
10,000
56,000
11,000
10,500
61,000
Machine A/c
Amount Date
Particulars
56,000 I Yr By Depreciation A/c
By Balance c/d
56,000
50,400 II Yr By Depreciation A/c
By Balance c/d
50,400
44,800 III Yr By Depreciation A/c
By Balance c/d
44,800
39,200 IV Yr By Depreciation A/c
By Balance c/d
39,200
33,600
Srinivas Engineering Works A/c
Amount
Date
Particulars
16,000 I Yr By Machinery A/c
12,000
By Interest A/c
30,000
58,000
11,500 II Yr By Balance b/d
20,000
By Interest A/c
31,500
11,000 III Yr By Balance b/d
10,000
By Interest A/c
21,000
10,500 IV Yr By Balance b/d
By interest A/c
10,500
Particulars
To Srinivas Engg works
To Srinivas Engg works
To Srinivas Engg works
To Srinivas Engg works
4.
Dr
Date
Particulars
To Branch stock
To Branch debtors
84
10,000
30,000
10,000
20,000
10,000
10,000
---
II Year
10,700
92,120
Dr
SVU(AA2EM) – AUGUST 2011
Interest A/c
Amount
2,000
1,500
1,000
500
UNIT-II
Date
I Yr
II Yr
III Yr
IV Yr
Particulars
By P & L A/c
By P & L A/c
By P & L A/c
By P & L A/c
Nellore Branch Account
Rs. Date
Particulars
7,600
By Cash
6,200
Cash sales
Cr
Amount
5,600
50,400
56,000
5,600
44,800
50,400
5,600
39,200
44,800
5,600
33,600
39,200
Cr
Amount
56,000
2,000
58,000
30,000
1,500
31,500
20,000
1,000
21,000
10,000
500
10,500
Cr
Amount
2,000
1,500
1,000
500
Cr
Rs.
24,000
SVU(AA2EM) – MARCH/APRIL 2013
33
80,000 + 60,000 + 40,000 + 20,000
AverageProfit =
= 50,000.
4
Good will = Average Profit  3 years
= 50,0003= 150,000
Gopi's share in good will = 1500001/8= 18750
Dr
Gopi Capital A/c
Cr
Particulars
RS
Particulars
RS
To Drawings
1,800 By Balance b/d
25,000
To Interest an Drawings
By Interest on capital
54 (25,00010/1009/12)
1,875
(1,8004/1009/12)
To Gopi Executors A/c
45,646 By Profit & Loss suspense A/c
1,875
By Share in Good will
18,750
47,500
47,500
UNIT – V
10.
Journal entries in the books of Madhav Co. Ltd.
Date
Particulars
LF Debit Credit
Bank A/c
Dr
2,25,000
2,25,000
To Equity share Application A/c (9,00025)
(Being Application money reserved)
Equity share Application A/c
Dr
2,25,000
To Equity share capital A/c
2,25,000
(Being Application money transferred to share capital)
3,15,000
Equity share Allotment A/c (9,00035)
Dr
45,000
Discount on issue of shares A/c (9,0005)
Dr
3,60,000
To Equity share capital A/c (900040)
(Being share allotment due)
Bank A/c
Dr
3,15,000
To Equity share Allotment A/c
3,15,000
(Being share allotment money received)
Equity share first & final call A/c
Dr
3,15,000
3,15,000
To Equity share capital (900035)
(Being share final call due)
Bank A/c 2(3,15,000-3,500)
Dr
3,11,500
To Equity share first & final call
(Being final call money received)
3,11,500
10,000
Equity share capital A/c (100100)
Dr
3,500
To calls in arrears (10035)
6,000
To Share forfeiture (10060)
500
To Discount an is shares (1005)
(Being 100 shares are forfeited)
5,400
Bank A/c (6090)
Dr
300
Discount on issue of share A/c (605)
Dr
300
Share forfeiture A/c (605)
Dr
SVU(AA2EM) – MARCH/APRIL 2013
To Equity share capital (60100)
(Being 60 shares are reissued)
Share for feiture A/c
To Capital Reserve A/c
(Being share for feiture a/c transfer to capital Reserve)
11.
Journal Entries
Date
Particulars
34
6,000
Dr
a. i) Bank A/c (4,000100)
Dr
To 6% Debentures A/c
(Being debentures are issued)
ii) 6% Debentures A/c
Dr
To Bank A/c
(Being Debentures are redeemed)
b. i) Bank A/c
Dr
To 5% Debentures A/c(3,500100)
To Premium on issue of debenture A/c (35005)
(Being debentures are issued)
ii) 5% Debentures A/c
Dr
To Bank A/c
(Being Debentures are redeemed)
c. i) Bank A/c (250095)
Dr
Discount on issue of Debentures A/c (2,5005) Dr
Loss on issue of Debenture A/c (25004)
To 8% Debentures A/c (2,500100)
To Premium on redemption of debentures A/c (25004)
(Being debentures are issued at discount and
repayable at par)
ii) 8% Debentures A/c
Dr
Premium on redemption of debentures
Dr
To Bank
(Being debentures are redeemed)
d. i) Bank A/c (3,00095)
Dr
Discount on issue of Debentures A/c (30005)
To 6% Debentures A/c
(Being debentures are issued)
ii) 6% Debentures A/c
Dr
To Bank
(Being debentures are redeemed)
e. i) Bank A/c (4,500100)
Dr
Loss on issue of debentures A/c(45005)
Dr
To 6% Debentures A/c
To Premium on redemption of debentures A/c
(Being debentures are issued)
3,300
3,300
LF Debit
Credit
4,00,000
4,00,000
4,00,000
3,67,500
4,00,000
3,50,000
17,500
3,50,000
3,50,000
2,37,500
12,500
10,000
2,50,000
10,000
2,50,000
10,000
2,60,000
2,85,000
15,000
3,00,000
3,00,000
3,00,000
4,50,000
22,500
4,50,000
22,500
SVU(AA2EM) – AUGUST 2011
2009
2010
4,500
3,900
Dr
Date
Particulars
2007 To Minimum Rent
2008
To Minimum Rent
2009
To Land Lord
2010
To Land Lord
Dr
Date
Particulars
2007 To Minimum Rent
2008
To Balance b/d
To Minimum Rent
2009
To Balance b/d
Dr
Date
Particulars
2007 To Land lord A/c
2008
To Land lord A/c
Dr
Date
Particulars
2007 To Cash A/c
2008 To Cash A/c
2009 To Cash A/c
To Short workings A/c
2010 To Cash A/c
83
3,700
3,700
-----
400
---
Royalty A/c
Amount Date
Particulars
2,700 2007 By Profit & Loss A/c
2,700
3,300 2008 By Profit & Loss A/c
3,300
4,500 2009 By Profit & Loss A/c
4,500
3,900 2010 By Profit & Loss A/c
3,900
Short Working A/c
Amount
Date
Particulars
300 2007 By Balance c/d
300
300 2008 By Balance c/d
100
400
400 2009 By Land lord
400
Minimum Rent A/c
Amount Date
Particulars
3,000 2007 By Royalty A/c
By Short workings A/c
3,000
3,400 2008 By Royalty A/c
By Short workings A/c
3,400
Land Lord A/c
Amount Date
Particulars
3,000 2007 By Minimum rent A/c
3,000
3,400 2008 By Minimum rent A/c
3,400
4,100 2009 By Royalty A/c
400
4,500
3,900 2010 By Royalty A/c
3,900
4,100
3,900
Cr
Amount
2,700
2,700
3,300
3,300
4,500
4,500
3,900
3,900
Cr
Amount
300
300
400
400
400
400
Cr
Amount
2,700
300
3,000
3,300
100
3,400
Cr
Amount
3,000
3,000
3,400
3,400
4,500
4,500
3,900
3,900
3.
No. of
Instalment
Down Payment
Analytical Table
Cash
Price
Interest
56,000
16,000
--40,000
Principle
16,000
Instalment
Amount
16,000
SVU(AA2EM) – AUGUST 2011
82
were reissued at Rs.20 each. You are required to pass necessary journal entries and show all
relevant items in the balance sheet of the company.
11. On January 1st 2004, Mohan industries issued Rs.30,000 debentures at par redeemable
at a premium of 5percent. The company decided to create capital redemption fund at 4 percent
compound interest. The annual installment which would produce Rs.31,500 in 6 years at 4
percent is Rs.4,748.97. Show Debenture redemption fund account and Debenture redemption
fund investment account for 6 year period.
SOLUTION - SVU(AA2EM) - AUGUST 2011
SECTION – A
1. a) Define lease.
Ans : Lease is agreement where by the less or conveys to the lease, in return for rent the right
to use an asset for an agreed period of time. The less or remains the owner but lessee has a
right to use the equipotent for an agreed rental to be paid over a period.
b) Narrate the features of Hire purchase system.
Ans : Refer Page No.7, Q.No.10
c) Record the objectives of branch accounting.
Ans : Refer Page No.36, Q.No.53
d) Define Insolvent.
Ans : Refer Page No.43, Q.No.65
e) Explain the nature Receipts and payments account.
Ans : It is real account. It is modified from cash account. We should be debited, all receipts and
credited all payments. At the end month or year it is balanced and shows debit. In this all capital
and revenue nature items irrespective of year are to be recorded.
f) Differentiate between Balance Sheet and statement of Affairs.
Ans : Refer Page No.45, Q.No.72
g) Explain the rules applicable in the absence of partnership deed.
Ans : From the accounting point of view if partnership deed is silent the following procedure is to
be followed under the Act.
1. All the profits and losses are to be shared equally.
2. No interest is payable on capital provided by the partners.
3. No interest is chargeable on drawings of partners.
4. No salary or commission is payable to managing partners.
5. Partners who provide loan to the firm are entitled to get interest @ 6% per annum.
h) What is sacrificing ratio?
Ans : When the new partner is admitted, the old partner forgoes a fraction of their share in
favour of the new partner and this reducing the share of profit or loss of the old partner. Sacrifice
made by the old partner can be found out by deductions the new share from the old share.
Sacrificing Ratio = old Ratio – New Ratio
i) Define share.
Ans : Refer Page No.54, Q.No.101
j) List out different types of debentures.
Ans : Refer Page No.25, Q.No.29
SECTION – B : UNIT-I
2.
Analytical Table
Minimum
Short
S.W.
Year Royalty
Rent
Workings Recouped Payment
2007
2,700
3,000
300
--3,000
2008
3,300
3,400
100
--3,400
SVU(AA2EM) – MARCH/APRIL 2013
ii) 6% Debentures A/c
Premium as redemption of debentures
To Bank
(Being debentures are redeemed)
35
Dr
4,50,000
22,500
4,72,500
SRI VENKATESWARA UNIVERSITY
II B.Com., DEGREE EXAMINATION, DECEMBER 2013
Paper II (354) : ADVANCE ACCOUNTING
Time : 3 Hrs]
(w.e.f. 2009-10)
[Max : 70 Marks
SECTION – A (5 × 2 = 10 Marks)
Answer any FIVE questions. Each question carries 2 marks.
1. a) Explain minimum rent.
b) Define royalties.
c) Explain dependent branches.
d) Features of deficiency account.
e) Narrate the features of receipts and payments account.
f) Features of single entry system.
g) What is partnership deed?
h) Explain realization account.
i) What is calls in arrears?
j) Explain the features of sinking fund investment accounts.
SECTION – B (5 × 12 = 60 Marks)
Answer ONE question from each Unit. Each question carries 12 marks.
UNIT – I
2. The following details are extracted from the records of East Coal Mines.
You are required to prepare landlord account, royalty account, minimum rent
account and short workings account.
Year:
2008
2009
2010
2011
2012
Output
6,000 40,000 45,000 42,000 36,000
(tonnes):
Royalty : Rs.8 per tonne
Minimum rent Rs.3,00,000 per annum
Short workings are recouped within three years.
Or
3. A bullet motor cycle was purchased by Ratna & Co on instalment system.
The cash price was Rs.7,450 and the payment was to be as follows.
Rs.2,000 were to be paid on signing the agreement and the balance in
three equal instalments of Rs.2,000 each at the end of each year. 5% interest is to
be charged by the vendor per annum.
The agreement was signed on 1st January 2008 write up the journal
entries in the books of Ratna & Co. open necessary ledger accounts. Ratna & Co.,
decides to maintain motor cycle account on the reducing balance method at 10%
per annum.
UNIT – II
SVU(AA2EM) – DECEMBER 2012
36
4. From the following particulars relating to Hyderabad branch for the year
ending 31st December, 2010 prepare branch account in the books of head office.
Rs.
Stock at branch 1-1-2010
10,000
Petty cash on hand on 1-1-2010
200
Cheques sent to branch for :
Rent
4,800
Salaries
9,200
Other expenses
1,500 15,500
Goods sent to branch
50,000
Remittances from branch
80,000
Stock at branch on 31-12-10
20,000
Petty cash on hand on 31-12-10
100
Goods returned by branch to head office
800
Or
5. Durga Prasad filed a petition for insolvency on 31st March 2012. The
details available from his records as on that date as follows:
Sundry debtors : goods Rs.2,500; doubtful Rs.15,000 (estimated to
produce Rs.12,500) Rs.7,500 bad
1000 shares in ABC Electronic Co. Ltd. (estimated to produce Rs.7,500)
Rs.12,500 loss in betting Rs.1,000
Shares in XYZ Co. Ltd. (Estimated to realize 37,500) Rs.45,750 creditors
Rs.42,800
Creditors holding first charge as shares of XYZ Co. to the extent of
Rs.12,500, Rs.15,000
Creditors holding first charge on shares of XYZ Co. Ltd. Rs.20,000 bills
payable Rs.2,000
Creditors for rent, taxes, wages (of which Rs.2,300 is preferential)
Rs.2,500
Furniture (estimated to realize Rs.1,500) Rs.7,500
Cash at bank Rs.275
Stock (Estimated to realize Rs.15,225) Rs.17,975
Bills receivable (Estimated to realize Rs.3,500) Rs.4,500
He commenced with capital of Rs.35,000 on 1-4-2009
Business resulted in profit of Rs.6,150 and Rs.6,800 for first two years
respectively and loss of Rs.4,250 in the 3rd year, after allowing Rs.3,500 towards
interest on capital every year. Total with drawals for the entire period Rs.22,000.
Prepare deficiency account and statement of affairs account from the
above data on 31st March 2012.
UNIT – III
6. The following is the Income and Expenditure Account of VSP club for year
ended 31-3-2010.
Income and Expenditure Account for the year ended 31-3-2010
Expenditure
Rs.
Income
Rs.
To Salaries
7,800 By Subscriptions 27,200
SVU(AA2EM) – AUGUST 2011
81
d) Additional capital introduced Rs.2,800 on 1.10.2009.
e) Charge interest on capital at 6 per cent per annum on the opening capital.
You are required to prepare (i) a statement showing the trading and net profit for the
year ending 31st March 2009 and (ii) statement of affairs on that date.
UNIT-IV
8. Siva and Rama are partners in a firm sharing profits in the ratio of 2 : 1. The financial
position as on 31st December 2009 was as follows :
Liabilities
Rs.
Assets
Rs.
Creditors
44,000 Cash in hand
18,250
Reserve fund
15,000 Debtors
14,750
Capital account :
Bills receivable
4,000
Siva
27,000 Stock
25,000
Rama
18,000 Land and buildings
30,000
Furniture
3,000
Profit and Loss A/c
9,000
1,04,000
1,04,000
On 1st January 2010, they decided to admit Krishna on a new partner with one-third
share. The following conditions will apply.
a) He has to bring Rs.15,000 towards capital and Rs.6,000 for goodwill.
b) Old partners will withdraw half of their goodwill share.
c) The value of buildings will be appreciated by 25 percent.
d) The stock are to be reduced to Rs.23,000 and furniture by Rs.1,000.
e) A provision for doubtful debts are to be created by 5 percent and to treat Rs.750 as bad
debt.
f) The new profit sharing ratio shall be 3 : 1 : 2.
Prepare Revaluation account, Partners capital accounts and Balance sheet as on 1st
January 2010, after admission of new partner Sri Krishna.
9. Meena, Deepa and Keerthi are partners sharing profits in the ratio of 3 : 2 : 1. The
Balance Sheet as on 30th June 2009 was as follows:
Liabilities
Rs.
Assets
Rs.
Creditors
25,200 Bank A/c
1,850
Reserve fund
11,000 Stock
10,050
Meena capital A/c 15,000 Debtors
31,300
Deepa capital A/c 10,000 Investment
8,000
Keerthi capital A/c
5,000 Furniture
3,250
Buildings
11,750
66,200
66,200
The partners decided to dissolve the firm on 1st July 2009. The assets are realized as follows :
a) Investments Rs.9,000 and stock Rs.8,750. Meena has taken over investments and
Deepa has taken over stock.
b) Keerthi has taken over furniture book value.
c) Debtors and buildings were realized at Rs.28,500 and Rs.12,500 respectively.
d) Realization expenses Rs.225.
Prepare Realization account, partner’s capital accounts and bank A/c as on 1st July 2009.
UNIT-V
10. Lavanya Co. Ltd. offered 5,000 equity shares of Rs.25 each to the public at premium of
10 percent against its registered capital of 8000 shares of Rs.25 each. The Co. received
applications for 4500 shares only. The amounts payable on shares were as follows :
On applications : Rs.5 per share
On allotment : Rs.7.50 per share (plus premium) face 5.00 pre 2.50
On 1st and final call : Balance of amount – 15
All money due was duly received, excepting on 100 shares on 1st and final call from
Gopichand a shareholder. The Co. decided to forfeiture these shares. Subsequently these share
SVU(AA2EM) – AUGUST 2011
80
Branch expenses details :
Salaries Rs.2,000; Rent Rs.5,000; Trade expenses Rs.2,500
Goods returned to Head office
4,500
Stock at branch as on 31.12.09 (invoice price)
3,600
Prepare Nellore branch account to identify branch net profit and pass necessary journal
entries to adjust stock value, as on 31st December 2009 in the books of Sai Bharatham Traders.
5. The assets and liabilities of Mr. Samba Siva Rao, a merchant, as on 31st March 2009
was Rs.92,000 and Rs.82,000 respectively. He filed his insolvency petition and estimated his
deficiency as Rs.33,000. Later he found that the following items were not recorded in his books.
a) Interest at 6 percent on his capital for one year.
b) A contingent liability for Rs.3,600 on bills discounted of Rs.7,200.
c) Outstanding expenses : Wages Rs.300; Salaries Rs.1,000; Taxes Rs.800 and Rent and
rates Rs.700
d) A loan of Rs.3,000 taken from his wife for the marriage of his daughter.
Prepare his statement of affairs and deficiency account.
UNIT-III
6. The Receipts and Payments account of Chittoor district sports club for the year ending
31st December 2009 was as follows :
Receipts
Rs.
Payment
Rs.
To Cash in hand
150 By Moving machine
1,100
To Cash at bank
2,100 By Ground men fee
1,500
To Subscriptions
5,800 By Rent
500
To Rent of the hall
3,000 By Salaries
4,500
To Life memberships
2,000 By Office expenses
2,400
To Entrance fee
200 By Sports equipment
1,200
To Donations
1,500 By Cash in hand
350
To Sales of grass
100 By Cash at bank
3,300
14,850
14,850
Additional information :
a) Subscriptions due on 31.12.08 Rs.900 and 31.12.09 was Rs.800
b) Subscriptions received in advance for 2010 Rs.200.
c) Sports equipment as on 31.12.08 Rs.1,100 and on 31.12.09 was Rs.1,300.
d) Moving machine was purchased on 1st January 2009.
e) Office expenses includes Rs.300 for 2008 and Rs.400 still due for payment for 2009.
f) Charge depreciation 20 percent p.a. on moving machine.
Prepare income and expenses account and balance sheet as on 31st December 2009.
7. Mr. Gopichand, Keeps his books on single entry system. The financial position as on
31st March 2009 was as follows :
31.3.08 31.3.09
Rs.
Rs.
Cash in hand
2,675
2,700
Bank overdraft
22,500 20,000
Stock in trade
29,670 31,100
Creditors
19,300 18,600
Debtors
15,100 14,900
Bills receivables
21,200 20,400
Land and buildings 26,500 26,500
Furniture
2,300
2,300
Bills payable
31,000 29,000
Additional information :
a) Create reserve for doubtful debts 5 per cent.
b) Charge depreciation : Buildings 4% and furniture 5per cent.
c) Drawings Rs.270 per month and interest on drawings Rs.150 p.a.
SVU(AA2EM) – DECEMBER 2012
To Rent
To Printing
To Insurance
To Audit fees
To Games & Sports
To Subscriptions to periodicals
To Miscellaneous expenses
To Loss on sale of furniture
To Depreciation :
On sports equipment
On furniture
To Excess of income over expenditure
Additional Information :
1,800
300
200
300
1,400
140
5,800
1,000
By Donations
2,400
1,240
6,820
29,200
37
2,000
29,200
31.3.09
Rs.
1,040
400
31.3.10
Rs.
1,080
600
Subscriptions in arrears
Advance subscriptions
Outstanding expenses :
Rent
200
320
Salaries
480
140
Audit Fees
200
300
Sports equipments less depreciation 10,000
9,600
Furniture less depreciation
12,000 11,160
Prepaid insurance
-60
Book value of furniture sold is Rs.2,800. Entrance fees capitalized is
Rs.1,600. On 1st April 2009, there was no cash in hand but there is a bank O.D. for
Rs.6,000. On 31st March 2010, cash in hand amounted to Rs.340 and the rest was
bank balance. Prepare receipts and payments account of the club for the year
ended 31-3-2010.
Or
7. The following are the Assets and Liabilities of A at the end and beginning
of the year 2012.
As on 31.12.12 As on 1.1.12
Rs.
Rs.
Land & Buildings
58,800
60,000
Plant & Machinery
1,20,000
96,000
Furniture & Fixtures
16,200
16,000
Stock in trade
56,000
30,000
Sundry debtors
3,10,000
2,80,000
Sundry creditors
1,50,000
1,45,000
Loan from bank
1,00,000
1,20,000
Outstanding Liabilities
80,000
90,000
Cash at bank
30,000
34,000
SVU(AA2EM) – DECEMBER 2012
38
During the year A had withdrawn Rs.5,000 in cash and Rs.3,000 in goods
from the business. He had also introduced Rs.80,000 as additional capital. A
machine costing Rs.20,000 had been sold during the year for Rs.18,000 and a
new machine costing Rs.50,000 was purchased in replacement. New furniture
costing Rs.2,500 was also purchased during the year.
Prepare a statement of profit or loss for the year ended 31-12-12.
UNIT – IV
8. The following is the balance sheet of A and B as at 31st December 2010
Liabilities
Rs.
Assets
Rs.
Creditors
20,000 Cash at bank 10,000
Capital :
Sundry assets 55,000
A
25,000
B
20,000
65,000
65,000
The partners shared profits and losses in the ratio of 3 : 2. On the above
date C was admitted as a partner on the condition that he would pay Rs.20,000 as
capital. Goodwill was to be valued at 3 years purchase of the average of four
year’s profit which were :
2007 Rs.9,000, 2008 Rs.12,000, 2009 Rs.14,000, 2010 Rs.13,000
The new profit sharing ratio is 7 : 5 : 4.
Prepare ledger accounts and balance sheet. If goodwill is raized and
written off.
Or
9. The following is the balance sheet of X, Y and Z on 31-03-10. The
partners sharing profit in the ratio of 5 : 3 : 2.
Balance sheet of X, Y and Z as at 31-3-10
Liabilities
Rs.
Assets
Rs.
Creditors
30,000 Cash at bank
6,000
Bills payable
7,000 Sundry debtors 20,000
Loan from X
30,000 () P.B.D
1,000 19,000
General Reserve
15,000 Stock
30,000
Capital Account :
Investments
10,000
X
30,000
Fixtures
2,000
Y
25,000
Plant
35,000
Z
15,000 70,000 Freehold property
50,000
1,52,000
1,52,000
The partnership was dissolved and the assets realized the following
amounts.
Stock and investments realized 10% less than the book values. Debtors
realized Rs.17,500 and plant Rs.30,000. Freehold property was sold for
Rs.85,000. Fixtures were taken overy by ‘X’ at an agreed value of Rs.1,200.
Creditors were paid off at a discount of 5%. ‘Y’ agreed to pay the bills payable.
Expenses of realization amounted to Rs.1,000. Prepare necessary ledger
accounts.
SVU(AA2EM) – MARCH 2011
79
By Sinking found
78,000
300
78,000
SRI VENKATESWARA UNIVERSITY
II B.Com., DEGREE EXAMINATION, AUGUST 2011
PAPER-II(354): ADVANCED ACCOUNTING
Time : 3 Hours]
(w.e.f. 2009-10)
SVU(AA2EM) – MARCH 2011
[Max. Marks :70
SECTION - A (5  2 = 10 Marks)
Answer any FIVE questions. Each question carries 2 marks.
1. a) Define lease.
b) Narrate the features of Hire purchase system.
c) Record the objectives of branch accounting.
d) Define Insolvent.
e) Explain the nature Receipts and payments account.
f) Differentiate between Balance Sheet and statement of Affairs.
g) Explain the rules applicable in the absence of partnership deed.
h) What is sacrificing ratio?
i) Define share.
j) List out different types of debentures.
SECTION - B (5 1 2 = 60 Marks)
Answer ONE question from each Unit. Each question carries 12 marks.
UNIT-I
2. Aparna owned certain patent rights. She granted license to Amar to use such right on
royalty basis. The following details are available.
Year
2007
2008
2009
2010
Royalty
Rs.2,700 Rs.3,300 Rs.4,500 Rs.3,900
Minimum rent Rs.3,000 Rs.3,400 Rs.3,700 Rs.3,700
Short workings are recouped within next two years. Prepare Royalty account, Short
working account, Minimum rent account and Landlord account.
3. On 1st Jan, 2006, Santa Trading Co. purchased a machine from Sreenivas engineering
works on Hire purchase agreement. The cash price of the machine was Rs.56,000. The
payments were made as follows :
Rs.16,000 on signing the agreement and the balance in four annual instalments of
Rs.10,000 each plus interest. Interest was charged at 5 percent per annum on outstanding
balance. Charge depreciation at 10 percent per annum on Straight line method. Prepare Machine
account, Interest account and Sreenivas engineering works account in the books of Santa
Trading Company.
UNIT-II
4. Sai Bharatham Traders of Chennai had a branch at Nellore. The following details are
extracted from the records of the branch for the year ending 31st December 2009. All expenses
are paid by the head office only. The branch was remitting all cash receipts into the bank account
of the Head office on daily basis. Good are invoiced to branch at cost plus 25 percent.
Rs.
Stock at branch as on 1.1.09 (invoice price)
7,600
Debtors at branch as on 1.1.09
6,200
Goods sent to branch (at invoice price)
58,000
Cash sales
24,000
Credit sales
46,000
Cash received from branch debtors
43,000
Discount allowed
2,600
Bad debts at branch
1,800
To Capital Reserve
(Being Balance Transfer to Reserve)
78
300
Balance Sheet of Himabindu Co.Ltd.,
Liabilities
Rs
Assets
Rs
Regd. Capital
Bank
3,60,300
50,000 E. Shares of Rs.10 each 50,0000 Discount on issue of shares
40,000
Issued Capital
45,000 Shares of Rs.10 each
4,50,000
Subscribed & Paid up Capital
40,000 Shares of Rs.10 each
4,00,000
Capital Reserve
300
4,00,300
4,00,300
11.
Dr
Sinking Fund Account
Cr
Date
Particulars
Rs
Date
Particulars
Rs
31.12.05 To Balance c/d
18,097.50 31.12.05 By P & L App. A/c 18,097.50
31.12.06 To Balance c/d
37,099.85 1.1.06 By Balance b/d
18,097.50
31.12.06 By P & L App. A/c 18,097.50
By Interest
904.85
37,099.85
37,099.85
31.12.07 To Balance c/d
57,052.20 1.1.07 By Balance b/d
37,099.85
31.1.07 By Interest
1,854.85
By P & L App A/c 18,097.50
57,052.20
57,052.20
31.12.08 To Balance c/d
78,002.20 1.1.08 By Balance b/d
57,052.20
By Interest
2,852.50
By P & L App A/c 18,097.50
78,002.20
78,002.20
31.12.09 To SF Investment A/c
300.00 1.1.09 By Balance b/d
78,002.20
To General Reserve 1,00,000.00 31.12.09 By Interest
3,900.00
By P & L App A/c 18,097.50
By P & L (Loss)
300.00
1,00,300.00
1,00,300.00
Dr
Sinking Fund Investment Account
Date
Particulars
Rs
Date
Particulars
31.12.05 To Bank
18,097 31.12.05 By Balance c/d
1.1.06 To Balance b/d
18,097 31.12.06 By Balance c/d
31.12.06 To Bank
19,000
37,097
1.1.07 To Balance b/d
37,097 31.12.07 By Balance c/d
31.12.07 To Bank
19,953
57,050
1.1.08 To Balance b/d
57,050 31.12.08 By Balance c/d
31.12.08 To Bank
20,950
78,000
1.1.09 To Balance b/d
78,000 31.12.09 By Bank
Cr
Rs
18,097
37,097
37,097
57,050
57,050
78,000
78,000
77,700
SVU(AA2EM) – DECEMBER 2012
39
UNIT – V
10. 'X' Ltd. issued 25,000 equity shares of 10 each at a discount of 10%
payable as follows :
On application Rs.2.00, On allotment Rs.2.00, On first call Rs.2.50, On
final call Rs.2.50
Applications were received for 20,000 shares and all of these were
accepted. All money due was received except the final call on 1,000 shares. Pass
necessary journal entries and show how these transactions would appear in
balance sheet of the company.
Or
11. Chintu Co. Ltd. offered to the public 20,000 equity shares of Rs.100 each
at a premium of Rs.10 per share. The payment was to be as follows:
On application Rs.20, On allotment Rs.40 (including premium), On fisrt call
Rs.25, On final call Rs.25
Application received in full and all money were received except final call
money on 500 shares.
Pass journal entries.
SRI VENKATESWARA UNIVERSITY
II B.Com. DEGREE EXAMINATION, MARCH 2012
Paper II(354) : ADVANCED ACCOUNTING
Time : 3 Hours
1. a)
b)
c)
d)
e)
f)
g)
h)
i)
j)
Max. Marks : 70
SECTION – A (5  2 = 10)
Answer any FIVE questions. Each question carries 2 marks.
Define short workings suspense account.
What is hire purchase price?
Explain the main types of branches.
Narrate the scope of insolvency Act.
Explain the nature of income and expenditure account.
Define Net worth.
Explain the features of fixed capital method.
Discuss the need for valuation of goodwill.
Explain the features of Redeemable preference shares.
What is Debenture Redemption Reserve?
SECTION – B (5  12 = 60)
Answer ONE question from each unit. Each question carries 12 Marks.
UNIT - I
2. The following details are extracted from the records of Kinnera Coal Co.
Ltd., You are required to prepare Land lord account, Royalty account, Minimum
rent account and short workings account.
Years :
2007
2008
2009
2010
Output : 1000 tons 2000 tons 4000 tons 7000 tons
Royalty : Rs.1.00 per ton of output.
Minimum Rent Rs.4,000.
Short working are recouped within three years.
SVU(AA2EM) – MARCH 2012
40
3. Mr. Deepak purchase one Bullet Motor Cycle from Bajaj Co. Ltd., on 1st
January 2007, under installment system. The cash price of the Bullet was
Rs.7,450. The payments were made as follows : Rs.2,000 on the date of signing
the agreement and the balance in three annual installment of Rs.2,000 each. The
Bajaj Co. was charging interest at 5 percent per annum. Charge depreciation at
the rate of 10 percent per annum on diminishing balance method. Prepare motor
cycle account, interest suspense account and Bajaj Co. account in the books of
Mr. Deepak.
UNIT - II
4. Nagamani Traders of Hyderabad had a branch at Kurnool. The following
details are extracted from the records of the branch for the year ending 31 March
2009. All expenses are paid by the head office. The cash receipts are deposited
into bank in the account of head office. Goods are sent to the branch by adding
33½ percent of profit on original price.
Rs.
Goods sent to branch (invoice price)
2,40,000
Stock at Branch on 1.4.08 (invoice price)
12,000
Cash sales
90,000
Good returned by branch debtors
3,000
Branch expenses paid by head office
26,800
Branch debtors as on 1.4.98
15,000
Discount allowed
500
Bad debts
750
Branch stock as on 31.3.09 (invoice price)
24,000
Branch Debtors as on 31.3.09
18,000
Cash collections from Debtors
1,35,000
Debtors cheques dishonoured at Branch
2,500
Prepare Branch stock account, Branch Debtors account and Branch
Adjustment account to identify the net profit for the year 2008-2009 in the books of
Nagamani Traders.
5. The assets and liabilities of Mr.Sudarsan, a merchant was Rs.67,500 and
Rs.46,500 respectively. He filed on insolvency petition in court by estimating
Rs.38,000 on deficiency. Later he found that the following items were not recorded
in his books.
a) Interest at the rate of 8 percent for one year on capital.
b) Amount outstanding : Salaries Rs.1,400; Wages Rs.1,600; Taxes
Rs.1,600 and Rent Rs.1,000.
c) A contingent liability for Rs.4,500 on bills discounted Rs.12,000'
d) A loan of Rs.7,500 was taken from his relative for the marriage of his
daughter. Prepare his statement of affairs and deficiency account.
UNIT - III
6. The following details were extracted from the records of Hyderabad city
sports club for the year ending 31st March 2009.
a) Receipts and Payments account as on 31.3.2009
Receipts
Rs
Payments
Rs
SVU(AA2EM) – MARCH 2011
To Bank
77
6,790
2,820
7,000
5,500
5,500
Prasad
600
210
Cr
David
--2,680
810
2,680
Bank Account
Rs
To Balance b/d
3,000 By Realisation A/c
To Realisation A/c
16,400 By Prasad A/c
By David A/c
19,400
UNIT – V
10.
Journal Entries in the Books of Himabindu Co. Ltd.,
Date
Particulars
LF
Debit
Cash A/c
Dr
80,000
To Share Application
(Being Application Money Received)
Share Application A/c
Dr
80,000
To Share Capital A/c
(Being Application Money Transited to Capital)
Share Allotment A/c
Dr
1,20,000
Discount on Issue of Share A/C
Dr
40,000
To Share Capital
(Being Allotment Money Due)
Bank A/c
Dr
1,20,000
To Share Allotment
(Allotment Money Received)
Share First & Final Call A/c
Dr
1,60,000
To Share Capital
(Call Money Due)
Bank A/c
Dr
1,59,600
To Share First & Final Call
(Being Call Money Received)
Share Capital A/c
Dr
1,000
To Share First and Final Call A/c
To Discount on issue of shares A/c
To Share forfeited A/c
(Being Shares forfeited)
Bank A/c
Dr
700
Dist on Issue of Shares A/c
Dr
100
Share forfeited A/c
Dr
200
To Share Capital
(Being Shares Reissued)
Share Forfeiture A/c
Dr
300
Cr
To Balance b/d
To Realisation A/c
To Realisation A/c
Dr
Prasad
----810
810
Current Accounts
David
2,000 By Balance b/d
50 By Capital A/c
630
2,680
76
43,404
7,000
Dr
SVU(AA2EM) – MARCH 2011
Rs
9,790
6,790
2,820
19,400
Less : Opening Capital
Interest on Capital (357006/100)
Profit
UNIT – IV
8.
Revaluation Account
Rs
100 By Loss:
To Furniture 20005/100
2,000
Varma Capital A/c
To Fixed Asset 2000010/100
To Stock
5,500
Sharma Capital A/c
7,600
Dr
Particulars
To P & L A/c
To Revaluation A/c
To Balance c/d
80,000
1,60,000
Capital Accounts
Varma Sharma Dharma Particulars
4,000 2,000
--- By Balance b/d
5,067 2,533
--- By Cash
44,933 32,467 12,000 By Goodwill
By General
Reserve
2400050/100
54,000 37,000 12,000
Liabilities
Capital
Varma
44,933
Sharma 32,467
Dharma 12,000
Creditors
1,20,000
1,60,000
1,59,600
400
100
500
37,842
5,562
Dr
Credit
80,000
35,700
2,142
Balance Sheet as on 1.4.09
Rs
Assets
Furniture
(-) Depreciation
Fixed Assets
89,400
(-) Depreciation
16,000 Stock
Debtors
(-) RBDD
Cash
1,05,400
Cr
Rs
5,067
2,533 7,600
7,600
Cr
Varma Sharma Dharma
40,000 30,000
------- 12,000
6,000 3,000
8,000
4,000
54,000 37,000 12,000
Rs
2,000
100
20,000
2,000
60,000
12,000
1,900
18,000
10,500
48,000
27,000
1,05,400
9.
Dr
To Debtors A/c
To Stock A/c
To Furniture A/c
To Fixed Assets A/c
To Bank (Creditors)
Realisation Account
Rs
9,400
4,600
100
4,000
9,790
By Creditors A/c
By Bank (Amount Realized) A/c
By David A/c
By Loss :
Prasad Capital A/c
David Capital A/c
Cr
Rs
10,000
16,400
50
810
630
27,890
1,000
---
Dr
To Current A/c
Prasad
210
Capital Accounts
David
2,680 By Balance b/d
Prasad
7,000
1,440
27,890
Cr
David
5,500
SVU(AA2EM) – MARCH 2012
41
To Balance b/d
7,500 By Salaries
3,000
To Donations
5,000 By Sports Materials
2,000
To Legacies
6,000 By Charities
3,000
To Sale of old furniture (Book value Rs.80)
75 By Rent and Taxes
2,000
To Entrance fee
7,500 By Advertising
250
To Sale of newspapers
250 By Investments
1,000
To Advertisement in hand book
750 By Additions to buildings 2,000
To Proceeds from concerts
2,500 By Furniture
2,000
To Tournament fund
1,500 By Balance c/d
34,325
To Subscriptions
2010
3,000
2009
25,000
2008
500
59,575
59,575
b) Ledger Balances :
31.3.08 31.3.09
Rs
Rs
Buildings
20,000 22,000
Library books
900
1,900
Furniture
1,080
3,000
Salaries outstanding
230
120
Subscriptions outstanding
600
700
Sports materials
1,000
800
Prepare Income and Expenditure account and Balance sheet as on 31st
March 2009, assuming that entrance fee and legacies to be capitalized.
7. Mr. Pradeep keeps his books under single entry system. The following
details are extracted from the records as on 31st March 2009.
Particulars
31.3.08 31.3.09
Rs
Rs
Cash at bank
5,000
4,300
Cash in hand
1,000
1,700
Stock
7,000
9,000
Debtors
8,400
6,000
Machinery
6,500
6,500
Bills Receivable
2,600
3,200
Creditors
2,500
1,600
Bills payable
4,000
3,200
Additional information :
a) He introduced further capital of Rs.2,000
b) Personal drawings Rs.800 per month
c) Depreciate machinery to 5 percent per annum
d) Create bad debts Rs.500 and doubtful debts provision at 6%
e) The total interest on drawings amounts to Rs.800 p.a.
You are required to prepare
SVU(AA2EM) – MARCH 2012
42
i) A statement showing the trading and net profit for the year ending 31st
March 2009.
ii) Statement of affairs as on that date.
UNIT - IV
8. Viswam and Jagan are partners in a firm sharing profits in the ratio of 3:2.
The balance sheet as on 31st March 2009 was as follows :
Liabilities
Rs
Assets
Rs
Creditors
15,000 Cash in hand
2,500
Bank overdraft
16,000 Debtors
22,500
Capital accounts
Buildings
12,500
Viswam
17,500 Stock
10,250
Jagan
17,500 Machinery
17,500
Furniture
750
66,000
66,000
On 1st April 2009, they have decided to admit Nandu as a new partner,
subject to the following conditions :
a) He has to pay Rs.2,500 on his share of goodwill which will be retained
in the business.
b) He has to Pay Rs.7,500 towards his share of1/4 th in profits.
c) The assets were revalued as follows : Machinery and furniture to be
depreciated by 10 percent; 5 percent provision for bad and doubtful
has to be created ; stock to be taken at Rs.12,500. Buildings to be
taken at Rs.15,000.
b) The new profit sharing ratio was 2:1:1 between Viswam, Jagan and
Nandu. You are required to prepare capital accounts of partners, profit
and loss adjustment account and Balance sheet of the firm after
admission of new partner on 1st April 2009.
9. Naveen, Sagar and Patel are partners sharing profits in the ratio of 3 : 2:
1. Sagar retires from the business on which date i.e. 31.12.2009, the balance
sheet of the firm was as follows:
Liabilities
Rs
Assets
Rs
Creditors
20,000 Cash at bank
5,000
Bill payable
10,000 Stock
15,000
General reserve
15,000 Debtors
20,500
Naveen capital A/c
40,000 (-) Provision
500
20,000
Sagar capital A/c
30,000 Van
25,000
Patel capital A/c
20,000 Machinery
70,000
1,35,000
1,35,000
The following conditions will apply for retirement:
a) Goodwill of the firm valued at Rs. 24,000
b) Stock to be depreciated by 10% and Van by 20%
c) Provision for bad debts to be increased by Rs. 1,000
d) There is outstanding expenses of Rs. 1,900
e) Machinery to be depreciated by 20 percent.
SVU(AA2EM) – MARCH 2011
75
SVU(AA2EM) – MARCH 2011
Balance Sheet as on 31.3.09
Rs
Asset
Rs
2,51,200
Cash
22,000
9,625
Furniture
35,000
(-) Deprecation
5,250
29,750
2,41,575 Land & Buildings
1,64,700
(-) Deprecation
8,235 1,56,465
Library Books
28,600
(-) Deprecation
5,720
22,880
Science equipment
480
Investments
10,000
2,41,575
2,41,575
Statement of Affairs as on 1.1.09
Liabilities
Rs
Asset
Rs
Creditors
9,200 Cash in hand and at Bank
9,600
Bills Payable
7,500 Stock
10,400
Debtors
8,200
Buildings
15,000
Capital (B/F) 35,700 Furniture
3,000
Bills Receivable
6,200
52,400
52,400
Liability on Bills Discount
Liabilities
Capital fund
(-) Deficit
7.
Liabilities
Creditors
(-) Discount
Bills Payable
Capital (B/F)
5,000
43,900
43,900
Working Notes
1. Un secured creditors
Liabilities
Rent
Bills Discounted
Friend Loan
2.
3.
4.
Gross Value
71,000
600
12,000
7,000
90,600
Expected to Rank
71,000
600
5,000
7,000
83,600
Preferential creditors
Wages
Salaries
Rates & Taxes
300
600
400
1,300
Calculation of Assets realized
= Total Liabilities – Deficiency
= 71,000 – 19,000
= 52,000
Capital
Capital = Assets – Liabilities
= 82,000 – 71,000
UNIT – III
=11,000
6.
Statement of Affairs as on 31.12.09
Rs
Assets
7,200
Cash in hand and at Bank
144 7,056 Stock
5,000 Debtors
43,604 (-) Bad debts
Rs
4,600
15,450
10,300
300
10,000
500
9,500
190 9,310
15,000
750 14,250
4,000
(-) RBD (5%)
(-) Discount (2%)
Buildings
(-) 5% Depreciation
Furniture
(-) Depreciation
(300010/100)
(100010/1006/12)
Bills Receivable
74
300
50
55,660
Note : Assumed that the Rs.1000 purchased in the middle of the year.
Statement Showing Profit / Loss
Particulars
Rs
Rs
Capital as on 31.12.09
43,604
3,000
Add: Drawings (25012)
Interest on drawings
300
3,300
46,904
Less : Additional Capital
3,500
350 3,650
8,400
55,660
Liabilities
Capital fund
Dr
Balance Sheet as on 1.4.08
Rs
Assets
2,51,200 Cash
Furniture
Land & Buildings
Books
Investments
O/s Tuition fees
2,51,200
Rs
20,000
35,000
1,60,000
24,000
10,000
2,200
2,51,200
Income and Expenditure Account for the year ended 31.3.09
Expenditure
Rs
Income
To Pay & Allowances
70,500 By Tuition fees (59,000 – 2,200)
To P.F Contribution
5,540 By Fines
To Printing & Stationery
700 By Grant from Govt.
To postage & Telegram
500 By Interest on securities
To News Papers
300 By Rent of Hall
To Laboratory expense
500 By Deficit
To Repairs
600
To Audit fees
300
To General expense
580
To Depreciation
On Land & Buildings(1,64,7005/100) 8,235
5,720
On Books (28,60020/100)
5,250
On Furniture (35,00015/100)
98,725
Cr
Rs
56,800
1,000
30,000
300
1,000
9,625
98,725
SVU(AA2EM) – MARCH 2012
43
Prepare Relevant ledger accounts and balance sheet as on 1st Jan. 2010
after the retirement of partner Sagar.
UNIT - V
10. Jyothirmayi Co. Ltd., Regd. with Rs.20,000 shares of Rs.50 each. It has
issued 15,000 shares of Rs.50 each to be general public. They have received
applications for 12,000 shares only. The amount is as payable as follows:
On application: 30 percent of face value
On allotment: 50 percent of face value
On 1" final call: 20 percent of face value
All money was duly received after making each call, excepting 50 shares on
allotment from Gopi, a shareholder and 100 shares on 1" and final call from
Krishna, another shareholder. The directors decided to forfeiture these shares
subsequently. 100 shares were reissued at a Rs.40 on fully paid. Pass necessary
journal entries and refer the relevant items in the balance sheet of the company.
11. On 1st January 2004, Laxmi Co. Ltd, issued 2000, 6 percent debentures of
Rs.100 each repayable at the end of four years at a premium of 5 percent. It has
been decided to establish sinking fund for the purpose. The interest on
investments being 4 percent. Sinking fund table shows that 0.235490 annually
amount to one rupee at 4 percent in four years. Investments were made in
multiples of hundred only. Investment were sold at a loss of Rs.500. Debentures
were paid off. Prepare sinking fund account and sinking fund investment account
for four year period.
SOLUTIONS – SVU(AA2EM) - MARCH 2012
SECTION – A
1. a) Define short workings suspense account.
Ans : Refer QNo.52, Page 36
b) What is hire purchase price?
Ans : Refer QNo.7, Page 5
c) Explain the main types of branches.
Ans : From Accounting point of view the following are the main types of branches
(1) Branch not keeping full system of accounting (2) Branch keeping full system of
accounting (3) Foreign Branches.
d) Narrate the scope of insolvency Act.
Ans : Refer QNo.64, Page 42
e) Explain the nature of income and expenditure account.
Ans : Refer Q.No.83, Page No.49
f) Define Net worth.
Ans : The assets and liabilities of the vendor business are revalued. From the total
assets, taken at revalued figures, the total liabilities at revalued figures are deducted.
Such surplus of assets over liabilities may be called as net worth of business. The
company shall have to pay the net worth of the vendor business house.
g) Explain the features of fixed capital method.
Ans : Refer Q.No.96, Page No.53
SVU(AA2EM) – MARCH 2012
44
h) Discuss the need for valuation of goodwill.
Ans : Goodwill is to be valued in the following circumstances : (a) When a new
partner is admitted (b) When a partner retires or dies (c) When there is a change
in the profit showing ration.
i) Explain the features of Redeemable preference shares.
Ans : Capital raised by issuing shares, is not to be repaid to the share holders. But
capital raised through the issue of redeemable preference shares is to be paid back by
the company to such share holders after the expiry of a stipulated period. As per
section so (5a), a company after the commencement of the companies (Amendment)
Act, 1988 can not issue any preference shares which are irredeemable or redeemable
after the expiry of a period of 10 year from the date of its issue.
j) What is Debenture Redemption Reserve?
Ans : Refer QNo.40, Page 31
SECTION – B :: UNIT - I
2.
Analytical Table
Year Output Royalty Min Short
S.W.
S.W. Not
Payment
Rent Working Recouped Recouped (P&L A/c)
2007 1000 1000 4000
3000
4000
2008 2000 2000 4000
2000
4000
2009 4000 4000 4000
5000
4000
2010 7000 7000 4000
7000
Dr
Date
Particulars
2007 To Cash A/c
2008 To Cash A/c
2009 To Cash A/c
2010 To Cash A/c
Land Lord A/c
Rs
Date
Particulars
4,000 2007 By Minimum Rent A/c
4,000
4,000 2008 By Minimum Rent A/c
4,000
4,000 2009 By Royalty A/c
4,000
7,000 2010 By Royalty A/c
7,000
Dr
Date
Particulars
2007 To Minimum Rent A/c
2008 To Minimum Rent A/c
2009 To Land Lord A/c
2010 To Land Lord A/c
Dr
Royalty A/c
Rs Date
1,000 2007
1,000
2,000 2008
2,000
4,000 2009
4,000
7,000 2010
7,000
Particulars
By Profit & Loss A/c
By Profit & Loss A/c
By Profit & Loss A/c
By Profit & Loss A/c
Minimum Rent A/c
Cr
Rs
4,000
4,000
4,000
4,000
4,000
4,000
7,000
7,000
Cr
Rs
1,000
1,000
2,000
2,000
4,000
4,000
7,000
7,000
Cr
SVU(AA2EM) – MARCH 2011
73
UNIT – II
4.
Tirupathi Branch A/c
Date
Particulars
Rs.
Particulars
Rs.
1.1.09 To Branch Stock
15,000 By Cash
To Branch Debtors
12,000 Cash sales
40,000
To Branch Furniture
1,000 From Debtors
51,000 91,000
To Branch Cash
700 By Branch Stock
14,000
31.12.09 To Goods Sent to Branch
By Branch Debtors
9,000
(-) Returns
80,000
By Branch Furniture
1,000
2,000 78,000 By Branch Cash
(700-300)
400
To Cash (expenses)
By Branch Stock Reserve
Rent
1,000
3,000
(15,00020/100)
Salary
2,000
By Goods Sent to
Stationery
200 3,200 Branch Reserve A/c
To Branch Stock Reserve A/c
15,600
(78,00020/100)
2,800
(14,00020/100)
To General P & L A/c
21,300
1,34,000
1,34,000
Dr
To Balance b/d
To Credit Sales
Branch Debtors Account
Rs
12,000 By Cash (B/f)
50,000 By Returns
By Discount
Balance c/d
62,000
Cr
Rs
51,000
1,000
1,000
9,000
62,000
5.
Statement of Affairs
Gross
Liabilities
Expected
Assets
Book value Estimated
Liability
to Rank
to Produce
90,600 Un Secured Creditors
Property as per
As Per list ‘A’
83,600 List ‘E’
82,000
52,000
--- Fully secured creditors
Book debits as per
As per list ‘B’
--- List ‘F’
------- Partly secured creditors
Bills as per list ‘G’
----As per list ‘C’
82,000
52,000
Preferential creditors
(-) Deduction as per
As per list ‘D’ 1300
Contra
1,300
1,300 (-) Deduction
Deficiency as per
50,700
As per contra 1300
--- List ‘H’
32,900
91,900
83,600
83,600
Capital
Deficiency
Deficiency Account
11,000 Loss on Assets (82,000- 52,000)
32,900 O/s Expenses :
Wages
Salaries
Rates & Taxes
Rent
Private Liability
30,000
300
600
400
600
1,800
7,000
SVU(AA2EM) – MARCH 2011
2010
Dr
Date
2007
2008
2009
To Bank
Particulars
To M. Rent
To Balance b/d
To M.Rent
To Balance b/d
Dr
Date
2007
2008
2009
2010
3.
Dr
Date
1.1.07
72
6,000
8,000
8,000
2010
6,000
8,000
8,000
By Royalty
Short working Account
Amt.
Date
Particulars
1,000 2007 By Balance c/d
1,000 2008 By Balance c/d
1,000
2,000
2,000 2009 By P & L A/c
Particulars
To M. Rent
To M. Rent
To Land Lord
To Land Lord
Royalty Account
Amt.
Date
1,000 2007
3,000 2008
6,000 2009
8,000 2010
Particulars
To Hire Vendor
Machinery Account
Amt.
Date
11,175 31.12.07
1.1.08
To Balance bld
11,175
10,057
31.12.08
By Depreciation
By Balance cld
1.1.09
To Balance bld
10,057
9,051
31.12.09
By Deprecation
By Balance cld
1.1.10
To Balance bld
9,051
8,146
Dr
Date
31.12.07
31.12.08
31.12.09
Particulars
To Mysore Printers
To Mysore Printers
To Mysore Printers
Dr
Date
Particulars
1.1.07 To Cash
31.12.07 To Cash
To Balance c/d
Particulars
By P & L A/c
By P & L A/c
By P & L A/c
By P & L A/c
Particulars
By Depreciation
By Balance cld
Interest Account
Amt.
Date
409 31.12.07
279 31.12.09
137 31.12.09
Mysore Printers
Amt.
Date
3,000 1.1.07
3,000 31.12.07
5,584
11,584
31.12.08 To Cash
3,000 1.1.08
To Balance c/d 2,863 31.12.08
5,863
31.12.09 To Cash
3,000 1.1.09
31.12.09
3,000
Particulars
By P & L A/c
By P & L A/c
By P & L A/c
Account
Particulars
By Machine
By Interest(11,175-3,000)5/100
By Balance b/d
By Interest (5,5845/100)
By Balance b/d
By Interest (2,8635/100)
Cr
Amt.
1,000
2,000
2,000
2,000
Cr
Amt.
1,000
3,000
6,000
8,000
Cr
Amt.
1,118
10,057
11,175
1,006
9,051
10,057
905
8,146
9,051
Cr
Amt.
409
279
137
Cr
Amt.
11,175
409
11,584
5,584
279
5,863
2,863
137
3,000
SVU(AA2EM) – MARCH 2012
Date
Particulars
Rs Date
Particulars
2007 To Land Lord A/c
4,000 2007 By Royalty A/c
By Short workings A/c
4,000
2008 To Land Lord A/c
4,000 2008 By Royalty A/c
By Short workings A/c
4,000
45
Rs
1,000
3,000
4,000
2,000
2,000
4,000
Dr
Short working A/c
Cr
Date
Particulars
Rs Date
Particulars
Rs
2007 To Minimum Rent A/c
3,000 2007 By Balance c/d
3,000
3,000
3,000
2008 To Balance b/d
3,000 2008 By Balance c/d
5,000
To Minimum Rent A/c
2,000
5,000
5,000
2009 To Balance b/d
5,000 2009 By Profit & Loss A/c
5,000
5,000
5,000
3.
Analytical Table
No. of Installments Cash price Interest Principle Installment (Rs)
7,450
1.1.07 Down payment
2,000
2,000
2,000
5,450
31.12.07
1,727
273
1,727
2,000
3,723
31.12.08
1,814
186
1,814
2,000
1,909
31.12.09
1,909
91
1,909
2,000
550
7,450
8,000
SVU(AA2EM) – MARCH 2012
1.1.09 To Balance b/d
1.1.10 To Balance b/d
6,705
6,034 31.12.09 By Depreciation
"
By Balance c/d
6,034
5,431
Dr
Interest Suspense A/c
Date
Particulars
Rs
Date
Particulars
1.1.07 To Bajaj Co. Ltd
550 31.12.07 By Interest A/c
"
By Balance c/d
550
1.1.08 To Balance b/d
277 31.12.08 By Interest A/c
"
By Balance c/d
277
1.1.09 To Balance b/d
91 31.12.09 By Interest A/c
91
Dr
Date
Particulars
1.1.07 To Bank A/c
31.12.07 To Bank A/c
31.12.07 To Balance c/d
31.12.08 To Bank A/c
31.12.08 To Balance c/d
31.12.09 To Bank A/c
Bajaj Co. A/c
Rs Date
Particulars
2,000 1.1.07 By Motorcycle A/c
2,000 1.1.07 By Interest suspense A/c
4,000
8,000
2,000 1.1.08 By Balance b/d
2,000
4,000
2,000 1.1.09 By Balance b/d
2,000
46
6,705
603
5,431
6,034
Cr
Rs
273
277
550
186
91
277
91
91
Cr
Rs
7,450
550
8,000
4,000
4,000
2,000
2,000
UNIT – II
Calculation of Depreciations
Motor cycle value on 1.1.07
(-) Depreciation for 2007
Value on 1.1.08
(-) Depreciation for 2008
Value on 1.1.09
(-) Depreciation for 2009
Motor cycle value
Dr
Date
Particulars
1.1.07 To Bajaj Co. Ltd
1.1.08 To Balance b/d
Motor Cycle A/c
Rs
Date
7,450 31.12.07
"
7,450
6,705 31.12.08
"
4.
7,450
745
6,705
671
6,034
603
5,431
Particulars
By Depreciation
By Balance c/d
By Depreciation
By Balance c/d
Dr
Branch Stock A/c
Cr
Date
Particulars
Rs
Date
Particulars
Rs
1.4.08 To Balance b/d
12,000 31.3.09 By Bank A/c (Cash sales) 90,000
31.3.09 To Goods sent to Branch A/c 2,40,000
By Branch debtors A/c 1,39,750
To Branch debtors A/c
3,000
By Shortage in stock B/F
1,250
By Balance c/d
24,000
2,55,000
2,55,000
Cr
Rs
745
6,705
7,450
671
6,034
Dr
Branch Debtors A/c
Cr
Date
Particulars
Rs
Date
Particulars
Rs
1.4.08 To Balance b/d
15,000 31.3.09 By Bank
1,35,000
31.3.09 To Branch stock A/c (Credit Sales) 1,39,750
By Branch stock A/c 3,000
To Bank A/c (Dis of Cheques)
2,500
By Branch A/c
Bad debts
750
Discount
500
SVU(AA2EM) – MARCH 2011
71
SECTION – A
a)
b)
c)
i)
Define Shortworkings
: Refer Page 35, QNo.50
Write the features of Instalment System
: Refer Page 49, QNo.81
Explain the features of branch account:
Such branches sell only those goods which are received from H.O and are not
usually allowed to make purchases in the open market except with the permission
of head office.
ii) Goods are supplied by the head office to such branches either at cost price or at
invoice price
iii) All expenses of the branch such as rent, salary, advertisement etc are paid by the
head office.
d) What is Deficiency Account?
: Refer Page 45, QNo.71
e) Define Capital Expenditure
: Refer Page 156, QNo.27
f) To which concern single entry system can be adopted? : Refer Page 1, QNo.1
g) Explain the features of fluctuating capital method.
Capital Method :- It in one which changes from year to year. When all the
adjustments relating to interest on capital, interest on drawings, salary or commission
distribution of profit or Loss will be made in the capital accounts the balance of capital
account will fluctuate from year to year and that is why these are known as fluctuating
capital accounts. In the absence of any contract to the contrary, particulars capital account
of fluctuating.
h) Define Goodwill
: Refer Page 50, QNo.89
i) What is call in arrear?
: Refer Page 56, QNo.106
j) Explain the method of redemption of debentures. : Refer Page 28, QNo.34
SECTION – B
UNIT – I
2.
Royalty Analysis Table
Year M. Rent Royalty Short working r. Short working Un R.S.W Land Lord
2007
2,000
1,000
1,000
----2,000
2008
4,000
3,000
1,000
----4,000
2009
6,000
6,000
----2,000
6,000
2010
6,000
8,000
------8,000
Particulars
To Land Lord
2008
To Land Lord
Dr
Date
2007
Particulars
To Bank
2008
To Bank
2009
To Bank
Minimum Rent Account
Amt.
Date
Particulars
2,000 2007 By Royalty
By Short working
2,000
4,000 2008 By Royalty
By Short working
4,000
Land Lord Account
Amt.
Date
Particulars
2,000 2007 By Minimum Rent A/c
2,000
4,000 2008 By Minimum Rent A/c
4,000
6,000 2009 By Royalty
70
Furniture
Fixed assets
1.
Dr
Date
2007
SVU(AA2EM) – MARCH 2011
Cr
Amt.
1,000
1,000
2,000
3,000
1,000
4,000
Cr
Amt.
2,000
2,000
4,000
4,000
6,000
2,000
20,000
1,10,000
1,10,000
They have decided to admit Dharma as a new partner with one fourth share in
st
future profits, subject to the following conditions, on 1 April 2009.
a) Dharma has to bring Rs.21,000, of which Rs. 9,000 will be treated as goodwill to
be retained in the Business.
b) 50 percent of reserve is to be remain as reserve for doubtful debts.
c) Depreciate furniture @ 5 per cent per annum and fixed assets being 10 per cent
per annum.
d) Stock to be revalued at Rs. 10,500.
Prepare revaluation account, partner's capital accounts and balance sheet of the
firm after admission of Dharma as on 1st April 2009.
9. Prasad and David are partners in a firm sharing profits in the ratio of 9:7. The
st
Balance Sheet as on 31 December 2009 was as follows :
Liabilities
Rs.
Assets
Rs.
Cretitors
10,000 Fixed assets
4,000
Prasad capital a/c
7,000 Bank a/c
3,000
David capital a/c
5,500 Debtors
9,400
Prasad current a/c
600 Stock
4,600
Furniture
100
David current a/c
2,000
23,100
23,100
They have decided to dissolve the firm on 1st January 2010. Assets are realized
as follows : Fixed assets Rs. 3,000; Bad debts Rs. 1,000; Stock Rs. 5,000; Furnitre was
taken up the David at a price of Rs.50. Creditors were allowed a discount of Rs.210.
Prepare Realization account, Bank account and Capital and Current accounts of
partners.
UNIT – V
10. Himabindu Co. Ltd. Regd. with Rs.5,00,000, divided into 50,000 equity shares
of Rs.10 each. The co.offered 45,000 equity shares at a discount of 10 per cent and
received application for 40,0000 equity shares only. The amount was payable as
follows:
On application
: Rs. 2 per share
On allotment
: Rs. 3 per share
st
: Rs.4 per share
On 1 and final call
All money on calls received, excepting 100 shares of Harinath who failed to pay
1st and final call. The board of directors forfeited these shares. Subsequently, reissued
at Rs.7 per share. You are required to pass necessary journal entries and record the
Balance Sheet with appropriate items.
11. On January 1, 2005, Mehata Metal Co. Ltd. issued Rs.1,00,000 debentures of
th
Rs.100 each to be redeemed at the end of 5 year at par. A sinking fund was
established for this purpose. The investment will earn 5 percent interest annually.
Sinking fund table shows that Re.0.180975 invested at the end of each year, at 5
percent compound interest will produce Re.1.00 at the end of 5 years. At the end of 5th
year the investments were sold at a loss of Rs.300. Debentures were paid off.
Prepare sinking fund account and sinking fund investment account for the 5 year period.
SolutionS – SVU(AA2EM) – MARCH 2011
SVU(AA2EM) – MARCH 2012
By Balance c/d
1,57,250
47
18,000
1,57,250
Dr
Branch Adjustment A/c
Cr
Date
Particulars
Rs Date
Particulars
Rs
31.3.09 To Branch Expens
31.3.09 By Stock Reserve 120001/4 3,000
26800+500+750
28,050
By Goods sent to Branch
60,000
To Branch Stock(Shortage) 1,250
2,40,0001/4
To Stock Reserve
6,000
24,0001/4
To Net Profit
27,700
63,000
63,000
5.
Statement of affairs of Mr. Sundarson
Gross
Liabilities
Expected
Assets
Book Expected
Liabilities
to Rank
Value to Produce
List A :
List E : Assets
67,500
8,500
67,000 Unsecured creditor
59,500 List F : Book debts
----List B :
List G :
Fully secured creditor
Bills Receivable
----List C :
67,500
8,500
Partly Secured creditor
List D :
(-) Preferential creditors
4,600 Preferential creditors 4,600
as per contra
4,600
(-) Contra
4,600
3,900
Deficiency as List H :
55,600
71,600
59,500
59,500
Deficiency A/c
Particulars
Rs
Particulars
Rs
Excess Assets over liability (Capital) 21,000 Loss on Realisation of Assets
59,000
Deficiency as per List H
55,600 Loss due to expenses
Wages
1,600
Salaries
1,400
Taxes
1,600
Rent
1,000 5,600
Contingent liability
4,500
Relater loan
7,500
76,600
76,600
Working Notes :
1. Unsecured creditors
Liabilities
46,500
Rent
1,000
Contingency of bills discounted
4,500
Relatives loan
7,500
59,500
SVU(AA2EM) – MARCH 2012
2. Preferential Creditors
Salaries
Wages
Taxes
48
1,400
1,600
1,600
4,600
3. Realization on Assets:
= Total Liabilities – Deficiency
= 46,500 – 38,000 = 8,500
4. Capital = Assets – Liabilities
67,500 - 46,500 = 21,000
UNIT - III
6.
Income & Expenditure A/c
Expenditure
Rs
Income
Rs
To Loss on sale of furniture (80-75)
5 By Subscriptions
25,000
To Salaries
3,000
(+) Outstanding
700 25,700
(-) O/s for 2008
230
2,770
By Sale of newspapers
250
(+) O/s for 2009
120 2,890 By Advertisement in hand book
750
To Charities
3,000 By Proceeds from concerts
2,500
To Rent and Taxes
2,000
To Advertising
250
To Depreciation on sport Material
(1000+2000-800)
2,200
To Surplus
18,855
29,200
29,200
Balance sheet as on 31.3.08
Liabilities
Rs
Assets
Rs
Salary outstanding 230 Cash
7,500
Capital Fund (B/F) 33,250 Sport material
1,000
Subscriptions outstanding 600
Furniture
1,080
Library books
900
Buildings
20,000
31,080
31,080
Balance sheet as on 31.3.09
Liabilities
Rs
Assets
Rs
Capital Fund
30,850
Cash
34,325
(+) Surplus
18,855 49,705
Buildings
22,000
Legacies
6,000
Library books
1,900
Entrance fee
7,500
Furniture
3,000
Tournament fund
1,500
Investments
10,000
Outstanding Salaries
120
Sports material
800
Subscription received in Advance
3,000 Outstanding Subscriptions 800
Donations
5,000 (700+100)
SVU(AA2EM) – MARCH 2011
To State government grants
To Interest on securities
To Rent from use of Hall
69
30,000
300
1,000
By Library books
By Postage
By Newspaper
By Science equipment
By Laboratory expenses
By New building construction
By Repairs and maintenance
By Audit fee
By General charges
By Balance c/d
4,600
500
300
480
500
4,700
600
300
580
22,000
1,11,300
1,11,300
Additional Information :
(a) On 1.3.2008 the college had the following assets : Furniture Rs.35,000; Land
and Building Rs.1,60,000; Library books Rs.24,000; Investments Rs.10,000,
Outstanding tuition fee Rs.2,200.
(b) Provide depreciation on land and buildings @5 per cent p.a. Furniture 15% p.a.
and library at 20 per cent. p.a.
Prepare Income and Expenditure and Balance Sheet as on 31st March 2009.
7. Mr. Jaya Sankar keeps his books under Single Entry System. The following
details were extracted for the year ending 31st December 2009.
December 2009
1.1.09 31.12.09
Rs.
Rs.
Cash in hand and at bank
9,600
4,600
Stock in trade
10,400
15,450
Creditors
9,200
7,200
Debtors
8,200
10,300
Buildings
15,000
15,000
Furniture
3,000
4,000
Bills receivable
6,200
8,400
Bills payable
7,500
5,000
Additional Information :
a) Drawings Rs.250 per month and interest on drawings Rs.300 p.a.
b) Additional capital introduced during the year Rs.3,500.
c) Create bad debts Rs.300 and doubtful debts and discount provision @ 5 per
cent and 2 per cent respectively on debtors.
d) Create discount on creditors @ 2 per cent p.a.
e) Charge Depreciation : Buildings 5% p.a. and Furniture 10% p.a.
f) Interest on capital at 6% p.a. is to be calculated on the capital at the beginning.
You are required to prepare
st
i) a statement showing the trading and net profit for the year ending 31
December 2009 and
ii) statement of affairs on the above data.
UNIT – IV
8. Varma and Sarma are partners in a firm sharing profits in the ratio of 2:1. The
Balance Sheet as on 31-3-2009 was as follows :
Liabilities
Rs.
Assets
Rs.
Creditors
16,000 Profit and Loss a/c
6,000
General Reserve
24,000 Cash
6,000
Varma capital a/c
40,000 Debtors
60,000
Sharma capital a/c
30,000 Stock
16,000
SVU(AA2EM) – MARCH 2011
68
6,000 respectively. The short workings are recouped for the first three years ago.
Prepare minimum rent account, landlord account, royalty account and short workings
account.
3. Lepakshi Art printers purchased a printing machine from Mysore Printers on 1st
January 2007 on hire purchase system. The cash price of the machine was Rs. 11,175.
The payments were made as follows. Rs. 3,000 on signing the agreement and the
balance in three annual instalments of Rs. 3,000 each. 5 percent interest was charged
by Mysore Printers per annum. Change depreciation at 10 per cent per annum on
diminishing balance of the cash price. Prepare machine account, Mysore Printers
account and interest suspense account in the books of Lepakshi Art Printers.
UNIT – II
4. Vaisali Stores of Bangalore had its branch at Tirupati. The following details are
extracted from the records of branch, for the year ending 31.12.2009.
Goods are invoiced to the branch at 20 per cent profit on invoice price. All
expenses are paid by the Head Office except petty expenses which are met by the
Branch Manager. The branch has to deposit all cash to the Head Office bank account on
daily basis.
Rs.
Stock as on 1.1.2009 (invoice price) 15,000
Debtors as on 1.1.2009
12,000
Cash on hand 1.1.2009
700
Office furniture (1.1.09)
1,000
Goods sent to branch (invoice price) 80,000
Goods returned by branch
2,000
Goods returned by debtors
1,000
Debtors (31.12.09)
9,000
Cash sales
40,000
Credit sales
50,000
Discount allowed
1,000
Expenses paid by Hand Office :
Rent Rs. 1000; Salary Rs.2000; Stationery Rs.200; Petty expenses paid by the
Manager Rs.300; Stock on 31.12.2009 (invoice price) Rs.14,000.
Prepare Tirupati Branch account to identify its net profit.
5. On 31st March, 2009, the assets and liabilities of Sri Somayajulu, a merchant
was Rs. 82,000 and Rs. 71,000 respectively. He filed his insolvency petition in account
and estimated his deficiency as Rs. 19,000. Later he found the following items were not
recorded in his books.
a) Interest at 8 per cent on his capital for one year.
b) Outstanding expenses : Wages Rs. 300; Salaries Rs. 600; Rent Rs. 600 and
Taxes Rs.400.
c) A contingent liability for Rs.5,000 as bills discounted of Rs. 12,000.
d) A loan of Rs. 7,000 taken from his friend for the marriage of his dependent son.
Prepare his statement of affairs and deficiency account.
UNIT – III
6. The receipts and payment account of Modern College of Tirupati for the year
ending 31st March 2009 was as follows :
Receipts
Rs.
Payments
Rs.
To Balance b/d
20,000 By Pay and allowances
70,500
To Tuition fee
59,000 By Provident fund contributions
5,540
To Fines
1,000 By Printing
700
SVU(AA2EM) – MARCH 2012
49
72,825
72,825
7.
Statement of affairs as on 31.3.08 and 31.3.09
Liabilities 31.3.08 31.3.09
Assets
31.3.08 31.3.09
Creditors
2,500
1,600 Cash at Bank
5,000
4,300
Bills payable
4,000
3,200 Cash in hand
1,000
1,700
Capital (B/F) 24,000 25,900 Stock
7,000
9,000
Debtors
8,400
6,000
Machinery
6,500
6,500
Bills Receivable
2,600
3,200
30,500 30,700
30,500 30,700
Statement showing profit & loss
Particulars
Rs
Rs
Capital as on 31.3.09
25,900
9,600
(+) Drawings (80012)
Interest on Drawings
800 10,400
36,300
(-) Additional Capital
2,000
Adjusted Closing capital
34,300
(-) Capital as on 31.3.08
24,000
Profit
10,300
325
(-) Depreciation on machinery (6,5005/100)
Bad debts
500
Provision for doubtful debts
330
1,155
Net profit
9,145
Revised statement of Affairs as on 31.3.09
Liabilities
Rs
Assets
Rs
Creditors
1,600
Cash at Bank
4,300
Bill payable
3,200
Cash in hand
1,700
Capital
24,000
Stock
9,000
(+) Additional Capital 2,000
Debtors
6,000
Net profit
9,145
(-) Bad debt
500
35,145
5,500
(-) Drawings
9,600
(-) Provision for doubtful debt 330 5,170
Int. on Drawings
800 24,745
Machinery
6,500
(-) Depreciation
325 6,175
Bills Receivable
3,200
29,545
29,545
8.
Dr
Profit & Loss Adjustment A/c
Cr
Particulars
Rs
Particulars
Rs
To Machinery
1,750 By Buildings
2,500
To Furniture
75 By Stock
2,250
To Provision for dab debts
1,125
To Profit
1,800
SVU(AA2EM) – MARCH 2012
Viswam capital A/c
Jagan capital A/c
50
1,080
720
4,750
Dr
Viswam, Jagan, Nandu Capital A/c
Particulars Viswam Jagan Nandu
Particulars
To Balance c/d 20,080 19,220 7,500 By Balance b/d
By Goodwill
By P&L Adjustment A/c
By Cash
20,080 19,220 7,500
By Balance b/d
Dr
4,750
Cr
Viswam Jagan Nandu
17,500 17,500
1,500 1,000
1,080 720
7,500
20,080 19,220 7,500
20,080 19,220 7,500
Cash A/c
Rs
Particulars
2,500 By Balance c/d
7,500
2,500
12,500
To Balance b/d
12,500
Balance Sheet as on 1.4.2009
Liabilities
Rs
Assets
Rs
Creditors
15,000
Cash
12,500
Bank O.D
16,000
Debtors
22,500
Capital
(-) Provision
1,125 21,375
Viswam 20,080
Buildings
12,500
Jagan
19,220 (+) Appreciation
2,500 15,000
Nandu
7,500
Stock
10,250
(+) Appreciation
2,250 12,500
Machinery
17,500
(-) Depreciation
1,750 15,750
Furniture
750
(-) Depreciation
75
675
77,800
77,800
9.
Dr
Revaluation A/c
Particulars
Rs
Particulars
1,500 By Loss:
To Stock (1500010/100)
5,000
Naveen
To Van (2500020/100)
To Provision for Bad debts
1,000
Sagar
To Outstanding expenses
1,900
Patel
14,000
To Machinery (70,00020/100)
22,900
Particulars
To Balance b/d
To Nandu Capital A/c
To Goodwill
Cr
Rs
12,500
12,500
Cr
Rs
11,450
7,633
3,817
22,900
SVU(AA2EM) – SEPTEMBER 2012
67
(Being debenture are issued at 10% premium)
d) Bank A/c
Dr 5,00,000
Loss on issues of debenture A/c
Dr 50,000
To Debentures A/c
5,00,000
To premium on redemption of debenture
50,000
(Being debenture issued at par repayable at premium)
e) Bank A/c
Dr 4,50,000
Discount on issue of debenture A/c
Dr 50,000
Loss on issue of debentures A/c
Dr 50,000
To Debenture A/c
5,00,000
To Premium Redemption debenture A/c
50,000
(Being debenture issued 10% discount repayable
at 10% premium)
At the time of Redemption
a,b,c) Debentures A/c
Dr 5,00,000
To Bank A/c
5,00,000
(Being debentures are redeemed)
d,e) Debentures A/c
Dr 5,00,000
Premium on Redemption of Debentures A/c
Dr 50,000
To Bank A/c
5,50,000
(Being debentures are redeemed)
SRI VENKATESWARA UNIVERSITY
II B.Com DEGREE EXAMINATIONS, MARCH 2011
PAPER - II(354) :ADVANCED ACCOUNTING
Time : 3 Hr]
(w.e.f 2009-10)
[Max. Marks : 70
SECTION – A (52 = 10 Marks)
Answer any FIVE questions. Each question carries 2 marks
1. a) Define Shortworkings
b) Write the features of Instalment System
c) Explain the features of branch account
d) What is Deficiency Account?
e) Define Capital Expenditure
f) To which concern single entry system can be adopted?
g) Explain the features of fluctuating capital method.
h) Define Goodwill
i) What is call in arrear?
j) Explain the method of redemption of debentures.
SECTION – B (5  12 = 60 Marks)
Answer any FIVE questions, choosing ONE from each Unit
Each question carries 12 marks
UNIT – I
2. Bharat Coal Co. Ltd. leased a colliery on 1st January 2007. The royalty was paid
at Rs. 1.00 per ton of output. The output for the first four years viz. 2007, 2008, 2009
and 2010 was 1000 tons, 3000 tons, 6000 tons and 8000 tons respectively. The
minimum rent for the first year Rs. 2,000; second year was Rs. 4,000 and there after Rs.
SVU(AA2EM) – SEPTEMBER 2012
(Being share Application money received)
2 Share application A/c
To Share capital
To Bank A/c
(Being share application money transferred
to share capital)
3 Share allotment A/c
To Share capital
To Share premium
(Being share allotment due)
4 Bank A/c
To Share Allotment A/c
(Being share allotment money received)
5 Share 1st & final call A/c
To share capital A/c
(Being share cal due)
6 Bank A/c
To Share 1st & final call A/c
(Being share call money received on
24200 shares)
7 Share capital A/c
To Share 1st & final call A/c (80010)
To Share forfeiture a/c(8005)
(Being 800 shares are forfeited)
8 Bank A/c (8009)
Share forfeiture A/c
To Share capital A/c (80010)
(Being forfeited share reissued)
9 Share forfeiture A/c
To Capital reserve
(Being forfeiture A/c transferred to capital reserve)
11.
Journal entries
Date
Particulars
At the time of Issue :
a) Bank A/c
To 6% Debentures A/c
(Being debentures issued at par)
b) Bank A/c
Discount on issue of debentures A/c
To 6% Debentures A/c
(Being debentures are issued at 10% discount)
c) Bank A/c
To Debentures A/c
To Debenture Premium A/c
66
Dr 60,000
10,000
50,000
Dr 1,00,000
75,000
25,000
Dr 1,00,000
1,00,000
Dr 1,25,000
1,25,000
Dr 1,21,000
1,21,000
Dr
8,000
4,000
4,000
Dr
Dr
7,200
800
Dr
3,200
Debit
Dr 5,00,000
Dr 4,50,000
Dr 50,000
Dr 5,50,000
8,000
3,200
Credit
5,00,000
5,00,000
5,00,000
50,000
SVU(AA2EM) – MARCH 2012
51
Dr
Capital A/cs
Cr
Particulars
Naveen Sagar Patel Particulars Naveen Sagar Patel
To Revaluation A/c 11,450 7,633 3,817 By Balance b/d 40,000 30,000 20,000
To Sagar Loan A/c
-- 35,367
-- By Reserve
7,500 5,000 2,500
To Balance c/d
48,050
-- 22,683 By Goodwill
12,000 8,000 4,000
59,500 43,000 26,500
59,500 43,000 26,500
Balance Sheet as on 31.12.09
Liabilities
Rs
Assets
Rs
Creditors
20,000
Cash at Bank
5,000
Bills payable
10,000
Stock
15,000
Capitals :
(-) Depreciation
1,500
13,500
Naveen
48,050
Debtors
20,500
Patel
22,683 (-) Provision
1,000
19,500
Sagar loan A/c
35,367
Van
25,000
O/s Expenses
1,900 (-) Deprecation
5,000
20,000
Machinery
70,000
(-) Depreciation
14,000
56,000
Goodwill
24,000
1,38,000
1,65,500
10.
Journal Entries
Particulars
Rs
Rs
Bank A/c
Dr 1,80,000
To Share Application A/c
1,80,000
(Being share application money received)
Share Application A/c
Dr 1,80,000
To Share Capital A/c
1,80,000
(Being share application money transfer to share capital)
Share Allotment A/c
Dr 3,00,000
To Share Capital A/c
3,00,000
(Being share allotment money due)
Bank A/c
Dr 2,98,750
To Share Allotment A/c
2,98,750
(Being Share allotment money received)
Share 1st and final call A/c
Dr 1,20,000
To Share capital A/c
1,20,000
(Being share call money due)
Bank A/c
Dr 1,18,500
To Share 1st and final call
1,18,500
(Being share call money received)
Share capital A/c (15050)
Dr
7,500
To Share Allotment A/c (5025)
1,250
To Share first and final call A/c (15010)
1,500
To Share forfeiture A/c
4,750
(Being 150 shares are forfeited)
Bank A/c (60040)
Dr
4,000
SVU(AA2EM) – MARCH 2012
Share forfeiture A/c
Dr
To Share capital 10050
(Being 100 shares are reissued)
Share forfeiture A/c
Dr
To Capital Reserve A/c
(Being share forfeiture A/c transferred to capital reserve )
52
1,000
1,750
5,000
1,750
Balance Sheet of Joythirmayi Co. Ltd.
Particulars
Rs
Particulars Rs
Authorized capital
Bank A/c 6,01,250
20000 share @ 50 each
10,00,000
Issued capital
15000 share @ 50 each
7,50,000
Subscribed, called up and paid up capital
11950 @ 50 each
5,97,500
Share forfeiture A/c
2,000
Capital Reserve
1,750
6,01,250
6,01,250
11. For are rupee the amount required is Rs.0.235490 for 2100000.235490 =
49452.90.
Dr
Sinking Fund A/c
Cr
Date
Particulars
Rs
Date
Particulars
Rs
31.12.04 To Balance c/d
49,452.90 31.12.04 By P&L Appropriation A/c 49,452.90
49,452.90
49,452.90
31.12.05 To Balance c/d
1,00,883.80 1.1.05 By Balance b/d
49,452.90
31.12.05 By P&L Appropriation A/c 49,452.90
" By Interest
1,978.00
1,00,883.80
1,00,883.80
31.12.06 To Balance c/d
1,54,371.90 1.1.06 By Balance b/d
1,00,883.80
31.12.06 By P&L Appropriation A/c 49,452.90
" By Interest
4,035.20
1,54,371.90
1,54,371.90
31.12.07 To Sinking fund Investment A/c
500.00 1.1.07 By Balance b/d
1,54,371.00
31.12.07 By P&L Appropriation A/c 49,452.90
" To General reserve
2,09,500.00 " By Interest
6,175.00
2,10,000.00
2,10,000.00
Dr
Sinking Fund Investments A/c
Date
Particulars
Rs
Date
Particulars
31.12.04 To Balance a/c
49,450 31.12.04 By Balance c/d
49,450
1.1.05 To Balance b/d
49,450 31.12.05 By Balance c/d
31.12.05 To Bank A/c (49,452+1,978) 51,430
Cr
Rs
49,450
49,4500
1,00,880
SVU(AA2EM) – SEPTEMBER 2012
65
Balance Sheet of Suresh, Mahesh, Ganesh
Liabilities
Rs
Assets
Rs
Sundry creditor 41,500 Cash in hand
62,500
Capitals :
Cash at Bank
13,000
Suresh
92,975 Debtors
12,000
Mahesh
70,325 (-) RBD
600 11,400
Ganesh
40,000 B/R
4,000
Stock
60,000
(-) Depreciation 6,000 54,000
Furniture
11,000
(-) Depreciation 1,100
9,900
Land & Building 75,000
(+) Appreciation 15,000 90,000
2,44,800
2,44,800
Dr
9.
Particulars
To Various Assets
To Bank
Realisation A/c
Rs
Particulars
1,47,000 By Creditors
5,000 By Bank
By Loss
Madan Capital
Jagan Capital
Kiran capital
1,66,000
Dr
17,000
1,66,000
Dr
Capital A/c
Cr
Particulars Madan Jagan Kiran Particulars Madan Jagan Kiran
To Drawings
24,000 24,000 24,000 By Balance b/d 50,000 40,000 30,000
To Realisation A/c 6,800 5,100 5,100 By Int on capital 5,000 4,000 3,000
To Bank
51,400 35,300 24,300 By P& L A/c
27,200 20,400 20,400
82,200 64,400 53,400
82,200 64,400 53,400
Dr
Particulars
To Realizations
Bank A/c
Rs
Particulars
1,30,000 By Realization
By Madan Capital A/c
By Jagan capital A/c
By Kiran capital A/c
1,30,000
UNIT – V
Journal entries
Particulars
10.
Date
1 Bank A/c
To Share application A/c
64
Profit & Loss Statement for the year ended 31.3.12
Particulars
Rs.
Capital as on 31.3.12 1,16,850
36,000
(+) Drawings (300012)
1,52,850
(-) Additional capital
15,000
Adjusted capital
1,37,850
(-) Capital as on 1.4.11
1,00,000
Profit
37,850
UNIT – IV
Cr
Rs
19,000
1,30,000
6,800
5,100
5,100
SVU(AA2EM) – SEPTEMBER 2012
Cr
Rs
19,000
51,400
35,300
24,300
1,30,000
Debit Credit
Dr 60,000
60,000
8.
Particulars
To Stock A/c (60000 10/100)
To Furniture (1100010/100)
To R.B.D (120005/100)
To Profit
Suresh capital
Mahesh capital
Revaluation A/c
Cr
Rs.
Particulars
Rs.
6,000 By Land & Building (7500020/100) 15,000
1,100
600
5,475
1,825
15,000
15,000
Dr
Capital A/c
Cr
Particulars Suresh Mahesh Ganesh Particulars
Suresh Mahesh Ganesh
To Cash A/c
7,500 2,500
-- By Balance b/d
80,000 66,000
-To Balance c/d 92,975 70,325 40,000 By Cash
--- 40,000
By Goodwill
15,000 5,000
-By Revaluation A/c 5,475 1,825
-1,00,475 72,825 40,000
1,00,475 72,825 40,000
By Balance b/d
92,975 70,325 40,000
Dr
Particulars
To Suresh capital A/c
To Mahesh capital A/c
Dr
Particulars
To Balance b/d
To Goodwill
To Ganesh Capital A/c
To Balance b/d
Goodwill A/c
Rs.
Particulars
15,000 By Cash
5,000
20,000
Cr
Rs.
20,000
Cash A/c
Rs.
Particulars
12,500 By Suresh capital A/c
40,000 By Mahesh capital A/c
20,000 By Balance c/c
72,500
22,500
Cr
Rs.
7,500
2,500
62,500
72,500
20,000
SVU(AA2EM) – MARCH 2012
1,00,880
1.1.06 To Balance b/d
1,00,880 31.12.06 By Balance c/d
31.12.06 To Bank A/c (49,452+4,035) 53,480
1,54,360
1.1.07 To Balance b/d
1,54,360 31.12.07 By Bank
"
By Sinking fund A/c
1,54,360
53
1,00,880
1,54,360
1,54,360
1,53,860
500
1,54,360
SVU(AA2EM) – SEPTEMBER 2012
SRI VENKATESWARA UNIVERSITY
II B.COM. DEGREE EXAMINATION, SEPTEMBER 2012
PAPER II (354) – ADAVANCE ACCOUNTING
Time : 3 Hours
Max. Marks : 70
SECTION – A (5  2 = 10 Marks)
Answer any FIVE questions. Each question carries 2 marks.
1. a) What is minimum rent?
b) Explain the nature of hire purchase trading account.
c) Explain the need for Branch Stock Reserve Account.
d) Narrate the scope of insolvency act.
e) Explain the features of Receipts and Payment account.
f) Discuss the limitations of single entry system.
g) Explain the need for valuation of goodwill.
h) Explain the importance of legal heir of the deceased person account.
i) What is share premium?
j) What is redemption out of profits?
SECTION – B (5  12 = 60 Marks)
Answer ONE question from each Unit. Each question carries 12 Marks.
UNIT - I
2. The following details are extracted from the records of AP Coal Mines Ltd.,
you are required to prepare Royalty account, landlord account, minimum rent
account and short workings account.
Years :
2008
2009
2010
2011
Output 2000 tons 3000 tons 4000 tons 5000 tons
Royalty : Rs.5 per tonne output
Minimum rent Rs.20,000 per annum
Short working are recouped within three years.
3. Rayalaseema Tourist Service Ltd., purchased a motor van on hire
purchase system on 1.4.08 from Maruti Co. Ltd., for cash price of Rs.1,64,000.
Rs.50,000 was paid on the date of signing the contract (1.4.09) and there after
Rs.50,000 paid annually on 31st March for three years. Interest was charged 15%
per annum. Depreciation was written off at the rate of 25% per annum reducing
balance method.
Prepare motor van account, Maruti Co. Ltd., Depreciation account, Interest
account and profit of loss account, assuming the books of accounts are closed
every year on 31st March.
UNIT - II
4. Janata Stores of Vijayawada had a branch at Guntur. Goods are invoiced
to branch at cost plus 25 percent. The branch keeps sales ledger and deposits all
cash received daily to the credit of Head office account. The following details are
available as per the records as on 31.3.12.
Rs
Stock (1.4.11)
75,000
54
Dr
63
Income & Expenditure A/c
Cr
Expenditure
Rs
Income
Rs
To Establishment expenses
By Subscription
2,12,500
(60000-4000)
56,000 (-) for 2010
7,500 2,05,000
To Telephone charges
5,400 By Hall rent
12,500
50,000
To Electric charges
2,500 By Donations (1000001/2)
To Stamps
6,000 By Telephone receipts
500
To Travelling
6,500 By O/s interest on Instalment
20,000
To Rent
55,000
(2,00,00010/100)
(+) O/s
5,000 60,000
To Depreciation on Library
23,000
To Donations
50,000
To Surplus
78,600
2,88,000
2,88,000
Balance Sheet as on 31.12.10
Liabilities
Rs
Assets
Rs
O/s Establishment (exp) 4,000 Cash in hand
12,500
Capital fund
6,21,500 Cash at Bank
2,05,500
10% Govt. Securities 2,00,000
O/s subscriptions
7,500
LIbrary
2,00,000
6,25,500
6,25,500
Balance Sheet as on 31.12.11
Liabilities
Rs
Assets
Rs
O/s Rent
5,000 Cash in hand
3,100
Capital fund 6,21,500
Cash at Bank
3,25,000
(+) Donations 78,600
10% Govt. Secretes 2,00,000
(+) Surplus
50,000 7,50,100 (+) O/s Interest
20,000 2,20,000
Library
2,00,000
(+) Additions
30,000
2,30,000
(-) Depreciation
23,000 2,07,000
7,55,100
7,55,100
7.
Statement of affairs as on 31.3.12
Liabilities
Rs.
Assets
Rs.
Wife loan
50,000
Furniture
20,000
(+) Creditors
(-) Depreciation 2,000 18,000
2,000
(50,0009/1006/12) 2,250 52,250 Cash in hand
O/s Rent
1,500 Cash at bank
26,000
Creditors
5,000 Debtors
48,000
Capital (B/f)
1,16,850 (-) R.B.D
2,400 45,600
Stock
68,000
B/R
16,000
1,75,600
1,75,600
SVU(AA2EM) – SEPTEMBER 2012
62
5.
Gross
Liabilities
Statement of affairs of Sri Rama Murthy as on 31.3.12
Liabilities
Expensed
Assets
Book Expected
to Rank
Value to produce
List A
List E Assets :
41,000 Unsecured creditors
39,000 Machine
7,500
6,000
List B
Furniture
1,500
750
12,500 Fully secured creditors
Cottage
3,400
1,500
(7,500+5,000)
12,550
Bank
50
50
(-) security realized
25,500
Consignment
2,500
2,500
Surplus as per conatra 13,000
List F
List C
Book debts (Good)
10,000
10,000
20,000 Partly secured
20,000
Doubtful
5,000
1,000
(-) security value
8,000 12,000 List G
List D
Bills Receivable
700
700
Preferential
1,500
22,500
(-) Deduction as per Contra 1,500
Nil (+) Surplus as per contra
13,000
35,500
(-) List D
1,500
34,000
List H Deficiency
17,000
51,000
51,000
Deficiency Account as per List H
Rs.
Rs.
Capital
25,000 Drawings
38,600
Profits
22,750 Loss in Business
12,500
7,500 Liability of Bills discounted 1,500
Interest on capital(12506)
Deficiency as per statement affairs 17,000 Loss on stock
10,000
Loss on machinery
1,500
Loss on furniture
750
Loss on cottage
1,900
Doubtful debts
4,000
Loss on shares
1,500
72,250
72,250
Working Notes :
Calculation of Unsecured creditors List A
Gross Expected to Rank
Trade creditors
35,000
35,000
Liability on bills discounted
3,500
1,500
Mrs. Loan
2,500
2,500
41,000
39,000
UNIT – III
6.
SVU(AA2EM) – SEPTEMBER 2012
55
Stock (31.312)
90,000
Sundry debtors (1.4.11)
42,000
Sundry debtors (31.3.12)
54,000
Goods invoiced by head office 5,46,000
Rent, rate taxes
24,000
Sundry expenses
4,800
Cash sales for the year
3,24,000
Credit sales
2,10,000
Cash received from debtors
1,98,000
Wages paid
20,400
Outstanding wages
2,000
You are required to prepare branch account in the books of Head office for
the year ending 31.3.12
5. Sri Rama Murthy filed insolvency petition on 31.3.12, the following
information is made available as on that date as per the records.
Rs
Trade creditors
35,000
Loan from Smt. Rama Murthy
2,500
Bills payable
2,500
Creditors secured by lien on shares
20,000
Creditors secured by lien on stock Liability on bills discounted
7,500
(estimated to Rank Rs.1,500)
3,500
Mortgage on mill
5,000
Creditors payable in full
1,500
Book debts : Good 10,000; Doubtful Debts
(estimated to produced Rs.1,000)
5,000
Consignment considered good
2,500
Shares (estimated to realize Rs.8,000)
7,500
Stock (estimated to realize Rs.20,000)
30,000
Cash at bank
50
Bills of exchange
700
Mill (estimated to realize Rs.5,500)
10,000
Machinery (estimated to realize Rs.6,000)
7,500
Furniture (estimated to realize Rs.750)
1,500
Cottages (estimated to realize Rs.1,500)
3,400
On 1st April, six years ago he had capital of Rs.25,000 total profits
Rs.22,750 in the first 4 years and losses in last 2 years Rs.12,500 after allowing
Rs.1,250 per year on interest on capital. Withdrawals amounted to be Rs.38,600
You are required to prepare deficiency account and statement of affairs as
on 31.3.12.
UNIT - III
6. The receipts and payment account of Padmavati Mahila Association for
the year ending 31.12.11 is as follows.
Rs
Rs
Opening Balance
Establishment Expenses
SVU(AA2EM) – SEPTEMBER 2012
56
Cash in hand
12,500
(includes 4000 for 2010) 60,000
Cash at Bank
2,05,500 Telephone charges
5,400
Subscriptions
2,12,500 Electric charges
2,500
(including Rs.7,500 for 2010)
Stamps and stationery
6,000
Hall rent
12,500 Traveling
6,500
Donations
1,00,000 Rent
55,000
Telephone receipts
500 Library
30,000
Donation
50,000
Cash in hand
3,100
Cash at Bank
3,25,000
5,43,500
5,43,500
Additional information :
a) Charge Rs.23,000 as depreciation on library account
b) Outstanding rent Rs.5,000.
c) Half of the donations received to be capitalized
d) The library account as on 31.12.10 Rs.2,00,000
e) The association adds 10% government securities Rs.2,00,000 on 31.12.10
You are required to prepare income and expenditure account and Balance
sheet as on 31.12.11.
7. Sri Devraj kept his books under single entry system. The following
information was extracted from the records of his business as on 31.3.12
a) He commenced his business with a capital of Rs.1,00,000 on 1.4.11. On
the same day he purchase furniture with Rs.20,000. On 30.9.11 he
borrowed Rs.50,000 from his wife at 9% p.a. (interest not yet paid). He
introduced further capital of Rs.15,000. He has withdrawn Rs.3,000 per
month for house hold expenses.
b) His financial position as on 31.3.12 was as follows : cash in hand
Rs.2,000, cash at bank Rs.26,000, Debtors Rs.48,000, stock Rs.68,000,
bills receivable Rs.16,000 creditors Rs.5,000, outstanding rent Rs.1,500
c) Furniture to be depreciated by 10% p.a. and to create reserve for bad and
doubtful at 5% on debtors.
You are required to prepare (i) Statement showing the net profit for the
year ending 31.3.12 and (ii) Statement of affairs as on that date.
UNIT - IV
8. Suresh and Mahesh are partners sharing profits in the ratio of 3 : 1. The
balance sheet of the firm as on 31.3.12 is as follows :
Rs
Rs
Sundry creditors
41,500 Cash in hand
12,500
Capital accounts
Cash at bank
13,000
Suresh
80,000 Debtors
12,000
Mahesh
66,000 Bills receivable
4,000
Stock
60,000
Furniture
11,000
Land and buildings
75,000
1,87,500
1,87,500
SVU(AA2EM) – SEPTEMBER 2012
61
31.3.11 By Interest A/c
50,000
Dr
Date
Particulars
31.3.09 To Motorcar A/c
Depreciation A/c
Rs
Date
Particulars
41,000 31.3.09 By Profit & Loss A/c
41,000
30,750 31.3.10 By Profit & Loss A/c
30,750
23,063 31.3.11 By Profit & Loss A/c
23,063
Cr
Rs
41,000
41,000
30,750
30,750
23,063
23,063
Interest A/c
Rs
Date
Particulars
17,100 31.3.09 By Profit & Loss A/c
17,100
12,165 31.3.10 By Profit & Loss A/c
12,165
6,735 31.3.11 By Profit & Loss A/c
6,735
Cr
Rs
17,100
17,100
12,165
12,165
6,735
6,735
31.3.10 To Motorcar A/c
31.3.11 To Motorcar A/c
Dr
Date
Particulars
31.3.09 To Maruthi Co.
31.3.10 To Maruthi Co.
31.3.11 To Maruthi Co.
Dr
Date
31.3.09
31.3.09
31.3.10
Dr
Particulars
To Depreciation
To Interest A/c
To Depreciation
To Interest A/c
To Depreciation
To Interest A/c
4.
Particulars
To Balance b/d
Stock
Debtor
To Goods sent to branch
To Bank A/c (exp)
(24000+4800+20400+20000)
To Stock reserve
(90,00025/125)
To Profit & Loss A/c
6,735
50,000
Profit & Loss A/c
Rs
Date
41,000
17,100
30,750
12,165
23,062
6,735
UNIT – II
Particulars
Cr
Rs
Guntur Branch A/c
Cr
Rs
Particulars
Rs
By Bank A/c (sale)
75,000
Cash sales
3,24,000
42,000
Collection from debtors 1,98,000 5,22,000
5,46,000 By Goods sent to branch
1,09,200
(5,46,00025/125)
51,200 By Stock reserve
15,000
18,000
(75,00025/125)
By Balance c/d
58,000
Stock
54,000
Debtors
90,000
7,90,200
7,90,200
SVU(AA2EM) – SEPTEMBER 2012
3.
60
Analytical Table
No. of installment Cash price Interest Principle Installment
1,64,000
1.4.08
50,000
-- 50,000
50,000
1,14,000
31.3.09
32,900 17,100 32,900
50,000
81,100
31.3.10
37,835 12,165 37,835
50,000
43,265
31.3.11
43,265 6,735 43,265
50,000
-36,000 1,64,000 2,00,000
Calculation of Depreciation
Machine value on 1.4.08
(-) Depreciation for the year
Value on 1.4.09
(-) Depreciation for the year
Value on 1.4.10
(-) Depreciation for the year
Dr
Date
Particulars
1.4.08 To Maruti Co A/c
1.4.09 To Balance b/d
1.4.10 To Balance b/d
1.4.11 To Balance b/d
Dr
Date
Particulars
1.4.08 To Bank
31.3.09 To Bank
To Balance c/d
31.3.10 To Bank A/c
To Balance c/d
31.3.11 To Bank A/c
Rs
1,64,000
41,000
1,23,000
30,750
92,250
23,063
69,187
Motorcar A/c
Rs
Date
Particulars
1,64,000 31.3.09 By Depreciation A/c
By Balance c/d
1,64,000
1,23,0000 31.3.10 By Depreciation A/c
By Balance c/d
1,23,000
92,250 31.3.10 By Depreciation A/c
By Balance c/d
92,250
69,187
Cr
Rs
41,000
1,23,000
1,64,000
30,750
92,250
1,23,000
23,063
69,187
92,250
Marthi Co. Ltd A/c
Rs
Date
Particulars
50,000 1.4.08 By Motorcar A/c
50,000 31.3.09 By Interest A/c
81,100
1,81,100
50,000 1.4.09 By Balance b/d
43,265 31.3.10 By Interest A/c
93,265
50,000 1.4.10 By Balance b/d
Cr
Rs
1,64,000
17,100
1,81,100
81,100
12,165
93,265
43,265
SVU(AA2EM) – SEPTEMBER 2012
57
On 1.4.12, firm decided to admit Ganesh as a new partner on the following
terms and conditions.
a) Suresh has to bring capital of Rs.40,000 for 1/5th share.
b) Suresh has to pay Rs.20,000 towards goodwill and half of this sum is to he
withdrawn by Suresh and Mahesh.
c) The Stock and furniture to be depreciated by 10% p.a.
d) A provision of 5% on debtors to be created as bad and doubtful
e) The value of land and buildings appreciated by 20%.
You are required to prepare necessary ledger accounts and balance sheet
after admission of Ganesh as a partner.
9. Madan, Jagan and Kiran are partners in a firm sharing profits of 4 : 3 : 3.
They are started business on 1.4.11 by contributing Rs.50,000, Rs.40,000 and
Rs.30,000 respectively, with a right of 10% interest on capital. The following
details are available as on 31.3.12.
a) Net profit Rs.80,000 before charging interest capital.
b) The total trade creditors Rs.19,000.
c) Each partner withdrawn Rs.2,000 p.m.
d) The value of total assets Rs.1,47,000.
On 1.4.12, they have decided to dissolve the firm. Assets realized for
Rs.1,30,000 and creditors were paid in full.
You are required to prepare realization account partners capital accounts
and bank account on the date of dissolution.
UNIT - V
10. Hyderabad infotech. Co. Ltd., had an authorized capital of Rs.5 lakh
divided into equity shares of Rs.10 each.
The company issued 25,000 equity shares of Rs.10 each at a premium of
Rs.1.00 per share. The amount payable as on application Rs.2 per share, on
allotment Rs.4 (including premium) and on 1st and final call Rs.5 per share.
Application for 30,000 shares were received. The directors allotted shares
and the excess money recived on application was returned. All shareholders paid
all allotment and first and final call money except Hari Rao who failed to pay the
call money on 800 shares. The directors forfeited these shares. The forfeiture
shares were reissued at Rs.9 per share as fully paid to Manmohan.
You are required to pass necessary journal entries in the books of
Hyderabad Info-Tech Co. Ltd.,
11. Vishnu Co. Ltd., issued 5,000, 6% debentures of Rs.100 each. Give
journal entries, if the debentures are
a) Issued at par and redeemed at par
b) Issued at discount of 10% and redeemed at par
c) Issued at premium of 10% and redeemed at par
d) Issued at par and redeemed at 10% premium
e) Issued at discount of 10% and redeemed at 10% premium.
SVU(AA2EM) – SEPTEMBER 2012
58
SOLUTIONS – SVU(AA2EM) - SEPTEMBER 2012
SECTION – A
1. a) What is minimum rent?
Ans: Refer Q.No.49, Page No.35
b) Explain the nature of hire purchase trading account.
Ans: Refer Q.No.82, Page No.49
c) Explain the need for Branch Stock Reserve Account.
Ans: Branch stock Reserve A/c is prepared to adjust the loads included in the
value of opening and closing stock at the branch.
d) Narrate the scope of insolvency act.
Ans: Refer Q.No.64, Page No.42
e) Explain the features of Receipts and Payment account.
Ans: Refer Q.No.84, Page No.49
f) Discuss the limitations of single entry system.
Ans: Refer Q.No.76, Page No.47
g) Explain the need for valuation of goodwill.
Ans: Refer Q.No.1(h) in March 2012 paper.
h) Explain the importance of legal heir of the deceased account.
Ans: The legal representatives or the executor of the deceased partner will be
entitled to get from the firm amounts due. After ascertaining the amount due to the
deceased partner, the balance in his capital account should be transferred to an
account opened in the name of his executor.
i) What is share premium?
Ans: Refer Q.No.113, Page No.58
j) What is redemption out of profits?
Ans: Redemption of debentures refers to the discharge of liability on account of
debentures. The Major sources where from the debentures can be redeemed may
be (1) out of profits etc., the effect of redemption of debentures out of profits is that
the company with holds a part of the divisible profits from distribution as dividend
which may be retained in the business it self as a source of internal financing.
SECTION – B
UNIT - I
2.
Analytical Table
Year Output Royalty Minimum Short S.w recouped
S.w not
Payment
Rent working
recouped (P&L) A/c
2008 2,000 10,000 20,000 10,000 --20,000
2009 3,000 15,000 20,000 5,000 --20,000
2010 4,000 20,000 20,000
-- -15,000
20,000
2011 5,000 25,000 20,000
-- --25,000
SVU(AA2EM) – SEPTEMBER 2012
Dr
Date
Particulars
2008 To Land lord A/c
2009 To Land lord A/c
Dr
Date
Particulars
2008 To Minimum Rent
2009 To Minimum Rent
2010 To Land lord A/c
2011 To Land lord A/c
Dr
Date Particulars
2008 To Bank
2009 To Bank A/c
2010 To Bank A/c
2011 To Bank A/c
Dr
Date
Particulars
2008 To Minimum Rent
2009 To Balance b/d
To Minimum Rent
2010 To Balance b/d
59
Minimum Rent A/c
Rs
Date
Particulars
20,000 2008 By Royalty A/c
By short workings A/c
20,000
20,000 2009 By Royalty A/c
By short workings A/c
20,000
Cr
Rs
10,000
10,000
20,000
15,000
5,000
20,000
Royalty A/c
Rs
Date
Particulars
10,000 2008 By Profit & Loss A/c
10,000
15,000 2009 By Profit & Loss A/c
15,000
20,000 2010 By Profit & Loss A/c
20,000
25,000 2011 By Profit & Loss A/c
25,000
Cr
Rs
10,000
10,000
15,000
15,000
20,000
20,000
25,000
25,000
Land Lord A/c
Rs
Date
Particulars
20,000 2008 By Minimum Rent A/c
20,000
20,000 2009 By Minimum Rent
20,000
20,000 2010 By Royalty A/c
20,000
25,000 2011 By Royalty A/c
25,000
Short working A/c
Rs
Date
Particulars
10,000 2008 By Balance c/d
10,000
10,000 2009 By Balance c/d
5,000
15,000
15,000 2010 By Profit & Loss A/c
15,000
Cr
Rs
20,000
20,000
20,000
20,000
20,000
20,000
25,000
25,000
Cr
Rs
10,000
10,000
15,000
15,000
15,000
15,000