NARSEE MONJEE INSTITUTE OF MANAGEMENT STUDIES

(DEEMED UNIVERSITY)

 

DISTANCE LEARNING PROGRAMMES IN MANAGEMENT

 

MAY 2005 EXAMINATION

 

ACCOUNTING PROCEDURES

 

ADBM

 

DATE : 9 / 5 / 2005 TOTAL MARKS : 100

TIME : 2 PM TO 5 PM

 

Notes:

1.            Attempt any four of the following questions.

2.            All questions are of 25 marks each

3.            Give working Notes to support your answer. You may make assumptions wherever required:

Problem 1 Journalise the following transactions. Also state the nature of each account involved in the Journal entry.

 

1 Dec.1, 1998, Ajit started business with Cash Rs. 40,000.

1 Dec. 3, he paid into the Bank Rs. 2,000.

1     Dec. 5, he purchased goods for cash Rs. 15,000.

2     Dec. 8, he sold goods for cash Rs. 6,000.

3     Dec. 10, he purchased furniture and paid by cheque Rs. 5,000.

4     Dec. 12, he sold goods to Arvind Rs. 4,000.

5     Dec. 14, he purchased goods from Amrit Rs. 10,000.

6     Dec. 15, he returned goods to Amrit Rs. 5,000.

7     Dec. 16, he received from Arvind Rs. 3,960 in full settlement.

8     Dec. 20, he withdrew cash from business for personal use Rs. 2,000

9     Dec. 24, he paid telephone charges Rs. 1,000.

10  Dec. 26, cash paid to Amrit in full settlement Rs. 4,000.

11  Dec. 31, paid for stationery Rs.200, rent Rs.500 and salaries to staff Rs. 2,000.

12  Dec.31, goods distributed by way of free samples Rs. 1,000.

 

Problem 2

Journalise the following transactions, post them in the Ledger and balance the accounts on 31^st January.

 

Jan

 

1     Ram started business with a capital of Rs. 10,000.

5     He purchased goods from Mohan on credit Rs. 2,000.

8     He paid cash to Mohan Ras.1, 000.

10 He sold goods to Suresh Rs. 2,000

12 He received cash from Suresh Rs. 3,000.

16      He further purchased goods from Mohan Rs. 2,000.

20  He paid cash to Mohan Rs. 1,000.

23  He further sold goods to Suresh Rs. 2,000.

28  He received cash from Suresh Rs. 1,000.

 

Problem 3

 

(a) State with reasons which of the following items are of capital nature or revenue nature.

 

(a)  Rs 2,000 spent on dismantling, removing and reinstalling plant and machinery to a more convenient site.

(b)  Rs.600 paid for removal of stock to a new site.

(c)  Rs.1, 000 paid for erection of a new machine.

(d)  Rs.2,000 paid on repairing of the new factory.

(e)  A cars engine, rings, and pistons were changed at a cost of Rs. 3,000. This resulted in improvements in mileage to 30 kms per litre of petrol. It had fallen from 15 kms to 8 kms.

(f)   A building constructed in 1960 was depreciated by the year 1990 to Rs. 5,000 It was demolished and a new building was constructed at a cost of Rs. 3 lakhs including Rs.10,000 for demolishing the old building.

(b) Explain in brief perpetual inventory system and how is stock valued for the purpose of accounting.

 

Problem 4

 

From the following particulars prepare a cash book with cash, Bank and Discount columns

Jan 1 Cash in hand Rs, 14,000; balance at bank Rs. 5,000.

Jan 3 Paid sales Rs. 6,000.

Jan 5 Paid Rs. 7,000 into bank.

Jan 6 Received a cheque for Rs 700 from Suraj.

Jan 8 Paid into bank Surajs cheque of Rs.700.

Jan 10 Paid to Anurag by cheque Rs. 980 in full settlement of his account of Rs. 1,000.

Jan 11 Withdrew from bank for office Rs.4, 000.

Jan 12 Cash sales Rs. 8,000.

Jan 13 Received a cheque from John for Rs. 10,000 and lodged it into the bank for clearance.

Jan 14 Paid commission to Ram by cheque Rs. 500.

Jan 15 Johns cheque dishonored.

Jan. 29 Drew a cheque for Rs 800 for personal use.

Jan 31 Paid salaries by cheque s. 1,500 and by cash Ras.500.

Jan 31 Bank charges Rs 20 and insurance premium Rs. 520 as shown in Pass Book.

 

 

 

 

 

Problem 5

 

From the following Trial Balance prepare the Trading and Profit and Loss Account for the year ending 31st March, 2005 and the Balance Sheet as on that date:

 

Particulars	Debit Rs	Credit Rs
Shri Bankers Capital Account		41,000
Shri Bankers Drawing Account	6,100
Mrs Bankers Loan Account		4,000
Sundry Creditors		45,000
Cash in Hand	250
Cash at Bank	4,000
Sundry Debtors	40,500
Patents	2,000
Plant and Machinery	20,000
Land and Buildings	26,000
Purchases of Raw Materials	35,000
Raw Material: 1.4. 04	3,500
Work in - process 1.4. 04	2,000
Finished Stock 1.4. 04	18,000
Carriage Inwards	1,100
Wages	27,000
Salary of Works Manager	5,600
Factory Expenses	3,400
Factory Rent and Taxes	2,500
Royalties (paid on sales)	1,200
Sales (less Returns)		1,23,400
Advertising	3,000
Office Rent and Insurance	4,800
Printing and Stationery	1,000
Office Expenses	5,800
Carriage Outwards	600
Discounts	1,400	2100
Bad debts	750
Total 2,15,500 2,15,500

 

The Stock on 31^st March 2005 was as follows:

Raw Materials Rs 4,000; work in- progress Rs 4,500, finished goods Rs. 28,000.

 

 

 

 

Problem No 6

 

The following are the figures extracted from the books of New Era Bank Limited, as on 31- 3 2004: (figures in rupees)

 

Interest and Discount received	37,05,738	Commission, exchange and brokerage	1,90,000
Interest paid on Deposits	20,37,452	Rent received	65,000
Issued and Subscribed Capital	10,00,000	Profit on sale of investments	2,00,000
Salaries and allowances	2,00,000	Depreciation of Banks properties	30,000
Directors fees and allowances	30,000	Stationery expenses	40,000
Rent and taxes paid	90,000	Preliminary expenses	25,000
Postage and telegrams	60,286	Auditors fees	5,000
Statutory reserve fund	8,00,000

 

Other information:

 

(a)          A customer to whom a sum of Rs. 10 lakhs has been insolvent and it is expected that only 50% can be recovered from his estate.

(b)          Also there were other debts, for which a provision of Rs. 1,50,000 was found necessary by the auditors.

(c)          Rebate on bills discounted on 31.3. 2003 was Rs. 12,000 and on 31.3.2004 was Rs. 16,000.

(d)          Provide Rs. 6,50,000 for Income tax.

(e)          The directors desires to declare 10% dividends.

(f)           A sum of Rs.20,000 was spent by a large factory in overhauling its entire plant which resulted in adding three years to its working life.

(g)          Heavy legal expenditure incurred by a newspaper company to defend a lawsuit.

(h)          Cost of Rs. 10,000 incurred in increasing the sitting accommodations and Rs. 5,000 in repainting of a cinema house.

 

Prepare the profit and Loss Account of New era Bank Ltd. for the year ended on 31.3.2004.

 

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