Bhavnagar University 2008 M.Com Insurance Management ADVANCED ACCOUNTING - Question Paper

10. From the subsequent balances of New General Insurance Co. Ltd. as on 31st December 2005 prepare (a) Fire revenue account (b) Marine revenue account.
Particulars Rs. Particulars Rs.
Survey expenses (fire) 10,000 Commission earned on
Additional reserve opening reinsurance ceded
(fire) 50,000 (marine) 60,000
Commission paid (marine) 1,08,000 Commission earned on
Commission paid (fire) 90,000 reinsurance ceded
Claims paid and (fire) 30,000
outstanding (marine) 3,80,000 Management expenses
Claims paid and (fire) 1,45,000
outstanding (fire) 1,80,000 Management expenses
Fire fund – opening 2,50,000 (marine) 4,00,000
Marine fund – opening 8,20,000 Marine premium less
Bad debts recovered 1,200 reinsurance 10,80,000
Share transfer fee 800 Fire premium less
Directors fees 5,000 reinsurance 6,00,000
Auditors fees 1,200 Profit on sale of land 60,000
Bad debts (marine) 12,000 Misc. Receipts 5,000
Bad debts (fire) 5,000 Difference in
exchange (Cr.) 300
Int. Divident etc.
received 14,000
Depreciation 35,000
In addition to usual reserves, additional reserve in case of fire insurance is to be increased by 5% of net premium.

11. The subsequent Trial Balance of Arun as at 31st Dec. 2005 is provided to you. Prepare Final Accounts.
Debit Balances Rs. Credit Balances Rs.
Opening Stock 15,000 Capital 90,000
Land and Buildings 35,000 Sundry Creditors 9,600
Machinery 50,000 Purchase returns 2,100
Furniture and Fixtures 5,000 Sundry incomes 1,200
Purchases 1,06,000 Reserve for bad debts 300
Salaries 11,000 Sales 2,07,000
General expenses 2,500
Rent 3,000
Postage and telegram 1,400
Stationery 1,300
Wages 26,000
Freight on purchases 2,800
Carriage on sales 4,000
Repairs 4,500
Sundry debtors 30,000
Bad debts 1,100
Cash in hand 100
Cash in bank 6,400
Sales returns 5,100
3,10,200 3,10,200
Adjustments :
(a) Wages outstanding Rs. 2,100
(b) Depreciate : Land and buildings 2%, Machinery 10% and Furniture and Fixtures 15%
(c) Closing Stock value Rs. 14,900.

12. Banu, Priya and Anu were in partnership sharing Profit and losses in the ratio of three : two : 1. On first January 2005 Priya retired. On that date the Balance Sheet was as follows :
Liabilities Rs. Assets Rs.
Bills payable 5,000 Machinery 30,000
Outstanding Parents 3,000
liabilities 2,000 Debtors 10,000
Trade creditors 7,000 Less :
Reserve 3,000 provision 500 9,500
Capitals : Stock 11,000
Banu 15,000 Cash 500
Priya 12,000
Anu 10,000 37,000

54,000
54,000
The terms were :
(a) Goodwill was to be valued at Rs. 12,000
(b) Outstanding liabilities to be brought down to
Rs. 1,500; Machinery is to be valued at 10% less than the book value and patents at Rs. 4,000.
(c) The total capital of the newly constituted firm was fixed at Rs. 30,000 to be contributed by the partners in the profit sharing ratio. Pass the journal entries to show the effect of the retirement and provide the new Balance sheet of the firm after retirement.
5,000 30,000
3,000
2,000 10,000
(&) JxUS 500 9,500
7,000 11,000
3,000 500
15,000
12,000
10,000 37,000

54,000
54,000

13. The Balance sheet of Sharma Co. Ltd. as on 31st December 2005 was as follows :
Liabilities Rs. Assets Rs.
Share capital : Premises 6,60,000
40,000 pref. shares of Plant 3,50,000
Rs. 10 each 4,00,000 Loose tools 1,00,000
1,20,000 equity shares Stock 80,000
of Rs. five each 6,00,000 Debtors 1,20,000
Reserve 2,000 Bills receivable 40,000
9% Debentures 2,40,000 Cash 12,000
Creditors 4,00,000 Goodwill 2,40,000
Profit and Loss a/c 40,000
16,42,000 16,42,000
Additional info :
Upon revaluation, it was considered that the entire goodwill was worthless. Scheme of rearrangement and reduction of capital was agreed to by the court and the creditors on the subsequent lines :
(a) That the creditors should accept 9% debentures to the extent of half of their debts, the balance to be settled by payment of cash at 90%.
(b) That the preference shares be decreased to shares of Rs. five every fully paid.
(c) That the equity shares be decreased to Re. one every.
Pass necessary journal entries and prepare Balance sheet after rearrangement.

¹. ¹.
6,60,000
40,000 3,50,000
10 4,00,000 1,00,000
1,20,000 80,000
56,00,000 PhÚõÎPÒ 1,20,000
2,000 40,000
9% 2,40,000 12,000
4,00,000 2,40,000
40,000
16,42,000 16,42,000

14. XY private Ltd. was incorporated on 1.7.2005 to take over the business carried on by PQ and Co as a going concern with effect from 1.4.2005, the subsequent is the P & L account for the year ended 31.3.2006 of XY Private Ltd. :
Rs. Rs.
To Administrative By G. Profit b/d 7,50,000
expenses 1,80,000
To Director's fees 30,000
To Selling expenses 3,60,000
To Audit fee 10,000
To Preliminary expenses 30,000
To Net Profit 1,40,000
7,50,000 7,50,000
Sales Rs. 30,00,000 (upto 30.6.2005, Rs. 10,00,000). You are needed to prepare a statement showing the profit earned prior to and after incorporation.
1.4.2005 1.7.2005
1,80,000,50,000
30,000
3,60,000
10,000
30,000
1,40,000
7,50,000 7,50,000

15. Give the proforma of Profit and Loss account with schedules of a Banking Company.

Earning:   Approval pending.