Institute of Chartered Financial Analysts of India (ICFAI) University 2009 C.A Chartered Accountant Solved PCC ACCOUNTS II - Question Paper
SOLVED PCC ACCOUNTS ques. PAPER NOV 2009
PAPER - 1 : ADVANCED ACCOUNTING
Answer all questions.
Wherever necessary, suitable assumption(s) should be made by the candidates. Working notes should form part of the answer.
Question 1
(i) Calculate the amount of Insurance claim to be lodged, based on the following information:
Value of stock destroyed by fire |
Rs.90,000 |
Insurance policy amount (subject to average clause) |
Rs.65,000 |
Value of stock salvaged from fire |
Rs.40,000 |
(ii) Arjun Ltd. issued 10,000 (Nos.) of 12% debentures of Rs.100 each in April, 2007. Interest is payable on 30th September and 31st March every year. The company purchased 2,000 debentures at Rs.104 per debenture on cum-interest basis on 1.7.2008. The own debentures were cancelled on 30.9.2009. Show Journal entries that are required to be passed for purchase of own debentures, interest on own debentures and for cancellation of those debentures.
(iii) Find out the profit of Mr. A from the following information:
Capital at the beginning of the year |
Rs.20,00,000 |
Drawings made by Mr. A |
Rs. 2,00,000 |
Capital at the end of the year |
Rs. 25,00,000 |
Additional capital introduced during the year |
Rs.1,00,000 |
(iv) Mr. X purchased a machine on hire purchase system. He made cash payment of Rs.30,000 and the balance was payable in 5 annual instalments of Rs.60,000 each. The cash price of the machine is Rs.3,00,000. Assume that the purchase was made on 1st April and the annual instalments are payable on 31st March of every year. Calculate the amount of interest for each year.
(v) A trader purchased goods for Rs. 1,70,000. The opening stock of inventory prior to the said purchase was Rs.30,000. His sales was Rs.2,10,000. Find out the closing stock of inventory if the Gross profit margin is 25% on cost.
(vi) Find out the income to be recognised in the case of X Bank Ltd. for the year ended 31st March, 2009:
(Rs. in lakhs) | ||||
Performing Assets |
Non-performing Assets | |||
Interest accrued |
Interest received |
Interest accrued |
Interest received | |
Term loans |
240 |
0 6 1 |
0 5 1 |
10 |
Cash credits and overdrafts |
1,500 |
1,240 |
300 |
24 |
(vii) An earthquake destroyed a major warehouse of ACO Ltd. on 20.5.2009. The accounting year of the company ended on 31.3.2009. The accounts were approved on 30.6.2009. The loss from earthquake is estimated at Rs.30 lakhs. State with reasons, whether the loss due to earthquake is an adjusting or non-adjusting event and how the fact of loss is to be disclosed by the company?
(viii) X Co. Ltd. having share capital of Rs.50 lakhs divided into equity shares of Rs.10 each was taken over by Y Co. Ltd. X Co. Ltd. has General Reserve of Rs.10,00,000 and Profit and Loss account Cr. Rs. 5,00,000. Y Co. Ltd. issued 11 equity shares of Rs. 10 each for every 10 shares ofX Co. Ltd.
How the Journal entry would be passed in the books of Y Co. Ltd. for the shares issued under the Pooling of interest method of amalgamation.
(ix) ABC Ltd. developed a know-how by incurring expenditure of Rs.20 lakhs. The know-how was used by the company from 1.4.2002. The useful life of the asset is 10 years from the year of commencement of its use. The company has not amortised the asset till 31.3.2009. Pass Journal entry to give effect to the value of know-how as per Accounting Standard-26 for the year ended 31.3.2009.
(x) P, N and T are equal partners. The decided to change their profit sharing ratio into 5:4:3. They raised the goodwill in the books to the extent of Rs.2,40,000 and it is to be written off immediately. Show Journal entries with narration to be passed for raising the goodwill and for its subsequent write off. (10x2 = 20 Marks)
(i) Total stock before fire = Rs. 90,000 + Rs.40,000 = Rs.1,30,000.
Stockdestoyed by fire
Amount of insurance claim=-----x Amount insured
Total stockbeforefire
(ii) Journal Entries | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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(iii) Statement showing profit earned by Mr. A during the year | ||||||||
|
Less: |
Additional capital introduced during the year |
(1,00,000) |
26,00,000 | ||
Less: |
Capital at the beginning of the year |
(20,00,000) |
Profit earned during the year |
6,00,000 |
Total of all instalments + Down Payment (5 x 60,000) + 30,000 = Rs. 3,30,000
Hire Purchase Price Total interest
H.P. Price - Cash Price Rs.3,30,000 - Rs.3,00,000 Rs. 30,000
Statement showing calculation of interest for each year: | ||||||||||||||||||
|
(v) Calculation of closing stock:
Cost of goods sold = Sales - Gross Profit
Rs.2,10,000 - (Rs. 2,10,000*25)
125
Rs.1,68,000
Opening Stock + Purchases - Cost of goods sold Rs.30,000 + Rs.1,70,000 - Rs.1,68,000 Rs.32,000
PAPER - 1 : ADVANCED ACCOUNTING (vi) Calculation of interest income of X Bank Ltd. to be recognised for the year ended 31.3.2009 | ||||||
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(vii) Para 8.3 of AS 4 "Contingencies and Events Occuring after the Balance Sheet Date, states that adjustments to assets and liabilities are not appropriate for events occurring after the balance sheet date, if such events do not relate to conditions existing at the balance sheet date. The destruction of warehouse due to earthquake did not exist on the balance sheet date i.e. 31.3.2009. Therefore, loss occurred due to earthquake is not to be recognised in the financial year 2008-2009.
However, according to para 8.6 of the standard, unusual changes affecting the existence or substratum of the enterprise after the balance sheet date may indicate a need to consider the use of fundamental accounting assumption of going concern in the preparation of the financial statements. As per the information given in the question, the earthquake has caused major destruction; therefore fundamental accounting assumption of going concern is called upon. Hence, the fact of earthquake together with an estimated loss of Rs. 30 lakhs should be disclosed in the Report of the Directors for the financial year 2008-2009.
(viii) In the books of Y Co. Ltd.
Journal Entries | |||||||
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* Purchase consideration Rs. 55,00,000 Less : Share capital of X Co. Ltd. Rs. 50,00,000 To be adjusted from general reserve Rs. 5,00,000 |
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(ix) Journal Entry |
| ||||||
(x) Journal Entries |
Dr. (Rs.) |
Cr. (Rs.) | ||
Goodwill A/c |
Dr. |
2,40,000 | |
To A's Capital A/c |
80,000 | ||
To B's Capital A/c |
80,000 | ||
To C's Capital A/c |
80,000 | ||
(Being the value of goodwill raised in the books, in old profit sharing ratio) | |||
A's Capital A/c |
Dr. |
1,00,000 | |
B's Capital A/c |
Dr, |
80,000 | |
C's Capital A/c |
Dr. |
60,000 | |
To Goodwill A/c |
2,40,000 | ||
(Being the value of goodwill written off from the books of the firm, in new profit sharing ratio) |
Note: As per para 36 of AS 10, Accounting for fixed Assets,' goodwill should be recorded in the books only when some consideration in money or money's worth has been paid for it. Therefore, the goodwill valued at the time of change in profit and loss sharing ratio is to be adjusted through capital accounts of the partners directly. The journal entries for raising goodwill and then writing it off is not in accordance with the said standard but have been given due to the requirement of the question.
Alternatively, Capital accounts of partner A and partner C may be adjusted to give net effect to the above entries.
The Adjusting Journal entry would be
Rs. |
Rs. | |
A's Capital A/c Dr. To C's Capital A/c (Being adjusting entry passed for goodwill, due to change in profit and loss sharing ratio) |
20,000 |
20,000 |
Question 2
Balance Sheet of Raman Ltd. is given below: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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The following information is furnished:
(i) One old machinery which has original cost of Rs.30,000 was sold for Rs.10,000. The accumulated depreciation in respect of the said machinery amounts to Rs. 16,000.
(ii) One new machinery was acquired for Rs. 46,000.
(iii) 9% Debentures were redeemed at a discount of 4% of their face value.
(iv) Dividend at 12% was declared and paid in cash.
(v) Income-tax liability of Rs.30,000 paid was debited to contingency reserve.
You are required to prepare Cash Flow Statement in accordance with the Accounting Standard 3. (16 Marks)
Answer
Cash Flow Statement of Raman Ltd. for the year ended 31st March, 2009
Rs. |
Rs. | |||
A. |
Cash flow from Operating Activities | |||
Net profit before tax (Rs. 54,000 - Rs. 40,000 + Rs. 60,000) |
74,000 | |||
Add: Adjustment for depreciation (W.N.1) |
24,000 | |||
14,400 | ||||
Loss on sale of machinery (W.N.2) |
4,000 1,16,400 | |||
Less: Profit on redemption of debentures |
(1,600) 1,14,800 | |||
Less .'Income tax paid |
(30,000) | |||
Operating profit before changes in Working Capital |
84,800 | |||
Add: Increase in outstanding expenses |
18,000 | |||
Decrease in sundry debtors |
8,000 | |||
72,000 |
98,000 1,82,800 | |||
Less: Decrease in sundry creditors |
14,000 | |||
Increase in stock in trade |
28,000 | |||
Increase in prepaid expenses |
2,000 |
(44,000) | ||
Net cash from operating activities |
1,38,800 | |||
B. |
Cash flow from Investing Activities Sale of old machinery Purchase of machinery Net cash used in investing activities |
10,000 (46,000) |
(36,000) |
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Working Notes: |
1. Depreciation Fund | ||||||||||||
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2. Machinery A/c | ||||||||||||
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Question 3
XYZ & Co. is a partnership firm consisting of Mr. X, Mr. Y and Mr. Z who share profits and losses in the ratio of 2:2:1 and ABC Ltd. is a company doing similar business.
Following is the Balance Sheet of the firm and that of the company as at 31.3.2009:
Liabilities |
XYZ & Co. Rs. |
ABC Ltd. Rs. |
XYZ & Co. Rs. |
ABC Ltd. Rs. | |
Equity share capital: Equity shares of Rs.10 |
20,00,000 |
Plant & machinery Furniture & fixture |
5,00,000 50,000 |
16,00,000 2,25,000 |
each | |||||
Partners capital: |
Stock in trade |
2,00,000 |
8,50,000 | ||
X |
2,00,000 |
Sundry debtors |
2,00,000 |
8,25,000 | |
Y |
3,00,000 |
Cash at bank |
10,000 |
4,00,000 | |
Z |
1,00,000 |
Cash in hand |
40,000 |
1,00,000 | |
General reserve |
1,00,000 |
7,00,000 | |||
Sundry creditors |
3.00.000 |
13,00.000 | |||
10.00.000 |
40.00.000 |
10.00.000 |
40.00.000 |
It was decided that the firm XYZ & Co. be dissolved and all the assets (except cash in hand and cash at bank) and all the liabilities of the firm be taken over by ABC Ltd. by issuing 50,000 shares of Rs. 10 each at a premium of Rs.2 per share.
Partners of XYZ & Co. agreed to divide the shares issued by ABC Ltd. in the profit sharing ratio and bring necessary cash for settlement of their capital.
The creditors of XYZ & Co. includes Rs.1,00,000 payable to ABC Ltd. An unrecorded liability of Rs.25,000 of XYZ & Co. must also be taken over by ABC Ltd.
Prepare:
(i) Realisation account, Partners capital accounts and Cash in hand/Bank account in the books of XYZ & Co.
(ii) Pass journal entries in the books of ABC Ltd. for acquisition of XYZ & Co. and draw the Balance Sheet after the takeover. (16 Marks)
Answer (i) In the books of XYZ & Co.
Realisation Account | ||||||||||||
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Partners Capital Accounts | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Cash and Bank Account |
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(ii) In the Books of ABC Ltd. |
Journal Entries | |||||||||||||||||||||||||||||||||||
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* It is assumed that cash at bank has been withdrawn to pay Rs.80,000 to partner Y. However, payment to Y of Rs. 80,000 can also be made by cash Rs.70,000 & by cheque Rs.10,000. |
To Unrecorded Liability Account To Business Purchase Account To Capital Reserve Account (Bal.Fig.) (Being take over of all assets and liabilities) |
25.000 6,00,000 25.000 | ||
3. |
XYZ & Co. Dr. To Equity Share Capital Account To Securities Premium Account (Being purchase consideration discharged in the form of shares of Rs. 10 each issued at a premium of Rs. 2 each) |
6,00,000 |
5.00.000 1.00.000 |
4. |
Sundry Creditors Account Dr. To Sundry Debtors Account (Being mutual owings eliminated) |
1,00,000 |
1,00,000 |
Balance Sheet of ABC Ltd. (After take over of XYZ & Co.) as at 31.3.2009
Liabilities |
Rs. |
Assets |
Rs. |
Share Capital : |
Plant and Machinery (5,00,000+16,00,000) |
21,00,000 | |
2,50,000, Equity shares of Rs.10 each fully paid up (out of which 50,000 shares has been issued for consideration other than cash) |
25,00,000 |
Furniture and fixture (50,000+2,25,000) |
2,75,000 |
Securities Premium |
1,00,000 |
Stock in trade (2,00,000+8,50,000) |
10,50,000 |
Capital Reserve |
25,000 |
Sundry Debtors (2,00,000+8,25,000-1,00,000) |
9,25,000 |
General Reserve |
7,00,000 |
Cash at Bank |
4,00,000 |
Sundry Creditors (3,00,000 + 13,00,000- 1,00,000) |
15,00,000 |
Cash in hand |
1,00,000 |
Unrecorded Liability |
25,000 | ||
48,50,000 |
48,50,000 |
Working Note:
Computation of purchase consideration:
50,000, Equity shares of Rs.12 (10+2) each = Rs.6,00,000 Equity shares distributed among partners:
Partner X = 20,000 shares @ Rs.12 Partner Y = 20,000 shares @ Rs.12 Partner Z = 10,000 shares @ Rs.12 |
= Rs.2,40,000 = Rs.2,40,000 = Rs.1,20,000 |
Rs.6,00,000 |
Question 4
The Balance Sheet of Neptune Ltd as on 31.3.2009 is given below:
Liabilities |
Rs. |
Rs. |
Assets |
Rs. |
80,000, Equity shares of Rs. 10 each fully paid |
8,00,000 |
Freehold property |
5,00,000 | |
5,000, 6% Cumulative preference shares of Rs.100 each fully paid |
5,00,000 |
Plant & machinery |
1,80,000 | |
6% Debentures (secured by freehold property) |
3,75,000 |
Trade investment (at cost) |
1,70,000 | |
Arrear interest |
22,500 |
3,97,500 |
Sundry debtors |
4,50,000 |
Sundry creditors |
17,500 |
Stock in trade |
2,00,000 | |
Directors loan |
3,00,000 |
Deferred advertisement expenditure Profit and Loss A/c |
1.50.000 3.65.000 | |
20,15,000 |
20,15,000 |
The Court approved a scheme of re-organisation to take effect on 1.4.2009 and the terms are given below:
(i) Preference shares are to be written down to Rs. 75 each and equity shares to Rs.2 each.
(ii) Preference dividend in arrear for 4 years to be waived by 75% and for the balance equity shares of Rs.2 each to be allotted.
(iii) Arrear of debenture interest to be paid in cash.
(iv) Debentureholders agreed to take one freehold property (Book value Rs.3,00,000) at a valuation of Rs.3,00,000 in part payment of their holding. Balance debentures to remain as liability of the company.
(v) Deferred advertisement expenditure to be written off.
(vi) Stock value to be written off fully in the books.
(vii) 50% of the Sundry Debtors to be written off as bad debt.
(viii) Remaining freehold property (after take over by debentureholders) to be valued at Rs.3,50,000.
(ix) Investment sold out for Rs. 2,00,000.
(x) 80% of the Directors loan to be waived and for the balance, equity shares of Rs.2 each to be issued.
(xi) Companys contractual commitments amounting to Rs.5,00,000 to be cancelled by paying penalty at 3% of contract value.
(xii) Cost of re-construction scheme is Rs. 20,000.
Show the Journal entries (with narration) to be passed for giving effect to the above transactions and draw Balance Sheet of the company after effecting the scheme. (16 Marks)
Answer
In the Books of Neptune Ltd. Journal Entries
Particulars |
Rs. |
Rs. | |
(i) |
6% Preference share capital A/c (Rs. 100) Dr. To 6% Preference share capital A/c (Rs. 75) To Capital reduction A/c (Being preference shares of Rs.100 each reduced to Rs.75 each as per the scheme) |
5,00,000 |
3.75.000 1.25.000 |
(ii) |
Equity share capital A/c (Rs.10) Dr. To Equity share capital A/c (Rs.2) To Capital reduction A/c (Being equity shares of Rs.10 each reduced to Rs.2 each as per the scheme) |
8,00,000 |
1,60,000 6,40,000 |
(iii) |
Capital reduction A/c Dr. To Equity share capital A/c (Being arrears of preference share dividend of one year to be satisfied by issue of 1,500 equity shares of Rs.2 each as per the scheme) |
30,000 |
30,000 |
(iv) |
Accrued debenture interest A/c Dr. To Bank A/c (Being accrued interest on debentures paid) |
22,500 |
22,500 |
(v) |
6% Debenture A/c Dr. To Freehold property A/c (Being claim of debentureholders settled in part by transfer of freehold property as per the scheme) |
3,00,000 |
3,00,000 |
(vi) |
Capital reduction A/c Dr. To Profit and loss A/c To Deferred advertising expenses A/c To Stock A/c To Sundry debtors A/c (Being the various assets written off as per the scheme) |
9,40,000 |
3.65.000 1.50.000 2,00,000 2.25.000 |
(vii) |
Freehold property A/c Dr. To Capital reduction A/c (Being appreciation in the value of remaining property) |
1,50,000 |
1,50,000 |
(viii) |
Bank A/c Dr. To Trade investment A/c To Capital reduction A/c (Being trade investment sold on profit) |
2,00,000 |
1,70,000 30,000 |
(ix) |
Director's loan A/c Dr. To Equity share capital A/c To Capital reduction A/c (Being Director's loan reduced by 80% and remaining balance discharged by issue of equity shares of Rs. 2 each) |
3,00,000 |
60,000 2,40,000 |
(x) |
Capital reduction A/c Dr. To Bank A/c (Being payment of 3% penalty on cancellation of contractual commitments) |
15,000 |
15,000 |
(xi) |
Capital reduction A/c Dr. To Bank A/c (Being reconstruction expenses paid) |
20,000 |
20,000 |
(xii) |
Capital reduction A/c |
Dr. |
1,80,000 | |
To Capital reserve A/c |
1,80,000 | |||
(Being balance of capital reduction account transferred) |
Balance Sheet of Neptune Ltd. (And Reduced) as at 1st April, 2009
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Question 5 |
(a) Pawan & Co. of Delhi has a branch at Jaipur. Goods are invoiced to the branch at cost plus 25%. The branch is instructed to deposit the receipts everyday in the head office account with the bank. All the expenses are paid through cheque by the head office except petty cash expenses which are paid by the Branch.
From the following information, you are required to prepare Branch Account in the books of Head office:
Rs. | |
Stock at invoice price on 1.4.08 |
1,64,000 |
Stock at invoice price on 31.3.09 |
1,92,000 |
Debtors as on 1.4.08 |
63,400 |
Debtors as on 31.3.09 |
84,300 |
Furniture & fixtures as on 1.4.08 |
46,800 |
Cash sales |
8,02,600 |
Credit sales |
7,44,200 |
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Depreciation to be provided on branch furniture & fixtures @ 10% p.a. on WDV basis. |
(b) TM Ltd. went in for voluntary liquidation on 31st March, 2009.
The Balance Sheet of the company as at 31.3.2009 is given below:
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The preference dividends are in arrear for the years 2007-08 and 2008-09. |
The companys Articles provide that on liquidation, out of surplus assets remaining after payment of liquidation costs and outside liabilities, it shall be applied firstly towards arrears of preference dividend, secondly to preference shareholders with a premium thereon at Rs.10 per share and finally any residue shall be paid to the equity shareholders.
The Liquidator realised the assets as below: | ||||||||||||
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Creditors were paid less discount of 5%. Debentureholders were paid alongwith accrued interest upto 30.6.2009.
Liquidators remuneration is 2% of the assets realised and cost of liquidation was Rs. 7,640. Prepare the Liquidators Statement of Account. (8+8 = 16 Marks)
Answer
(a) In the Books of Pawan & Co., Delhi (Head Office)
Jaipur Branch Account
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Working Notes: |
1. Depreciation on furniture
Rs. | |
10% p.a. on Rs.46,800 10% p.a. for 6 months on Rs.5,000 |
4,680 250 |
4,930 |
2. Closing balance of branch furniture as on 31.3.2009 | ||||||||||||
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3. Collection from branch debtors
Branch Debtors Account | ||||||||||||
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4. Cash remitted by the branch to head office
Cash sales + Collection from debtors - Petty expenses - Furniture acquired by branch Rs.8,02,600 + Rs.7,23,300 (W.N. 3) - Rs.20,900 - Rs.5,000 = Rs.15,00,000
(b) TM Ltd. (In Liquidation)
Liquidators Final Statement of Account
Particulars |
Rs. |
Particulars |
Rs. |
Rs. | |
To Assets realised: |
By |
Liquidator's |
49,360 | ||
remuneration | |||||
(24,68,000* Xqq ) | |||||
Freehold property |
14,25,000 |
By |
Liquidation cost |
7,640 | |
Plant |
5,05,000 |
By |
Debenture holders: | ||
Motor vehicles |
1,18,000 |
5% Debentures |
2,00,000 | ||
Stock |
3,00,000 |
Add: Debenture Interest |
5,000 | ||
Debtors |
1,20,000 |
Interest for 3 months | |||
upto 30.6.2009 |
2,500 |
2,07,500 | |||
By |
Bank overdraft |
1,16,000 | |||
By |
Creditors |
2,30,000 | |||
Less: 5% discount |
11,500 |
2,18,500 | |||
By |
Preference Shareholders: | ||||
Share Capital |
12,00,000 | ||||
Add: 10% premium |
1,20,000 | ||||
Add: O/s dividend (for 2 | |||||
years) |
2,40,000 |
15,60,000 | |||
By |
Equity shareholders | ||||
[(Bal. Fig.) at the rate of | |||||
Rs.3.09 per share] |
3,09,000 | ||||
24,68,000 |
24,68,000 |
Question 6
(a) From the following information furnished by X & Co., prepare Total Debtors Account.
Transactions for the month of March, 2009 |
Rs. | |
(i) |
Sales (includes cash sales of Rs.7,000) |
68,000 |
(ii) |
Collections from debtors (cash) |
57,000 |
(iii) |
Discount allowed |
2,000 |
(iv) |
Bad debts written off |
1,500 |
(v) |
Cheques received |
10,000 |
(vi) |
Cheques dishonoured |
2,000 |
(vii) |
Return inward |
700 |
(viii) |
Bad debts written off- now recovered |
500 |
(ix) |
Provision for doubtful debts |
1,200 |
(x) |
Balance outstanding on 1.3.2009 (Receivables) |
20,000 |
(b) What are the disadvantages of Enterprise Resource Planning (ERP) ?
(c) Harish has the following bills due on different dates. It was agreed to settle the total amount due by a single cheque payment. Find the date of the cheque.
(i) Rs. 5,000 due on 5.3.2009
(ii) Rs. 7,000 due on 7.4.2009
(iii) Rs. 6,000 due on 17.7.2009
(iv) Rs. 8,000 due on 14.9.2009
(d) X Co. Ltd. has its share capital divided into equity shares of Rs.10 each. On 1.10.2008 it granted 20,000 employees stock option at Rs.50 per share, when the market price was Rs.120 per share. The options were to be exercised between 10th December, 2008 and 31st March, 2009. The employees exercised their options for
16,000 shares only and the remaining options lapsed. The company closes its books on 31st March every year.
Show Journal entries (with narration) as would appear in the books of the company upto 31st March, 2009. (4x4 = 16 Marks)
Answer (a) Total Debtors Account
Rs. |
Rs. | ||
To Balance b/d |
20,000 |
By Discount allowed |
2,000 |
To Sales |
61,000 |
By Bank A/c |
10,000 |
To Bank A/c (Cheques |
2,000 |
By Cash A/c |
57,000 |
dishonoured) | |||
By Bad debts A/c |
1,500 | ||
By Sales return A/c |
700 | ||
By Balance c/d |
11,800 | ||
83,000 |
83,000 |
(b) The disadvantages of Enterprise Resource Planning (E.R.P.) are as follows:
(i) Lesser flexibility: The user may have to modify their business procedure at times to be able to effectively use the E.R.P.
(ii) Implementation hurdles: Many of the consultants doing the implementation of the E.R.P. may not be able to fully appreciate the business procedure, to be able to do a good implementation.
(iii) Expensive: E.R.Ps are normally priced at an amount which is often beyond the reach of small and medium size organisations.
(iv) Complexity of the software: Generally an E.R.P. package has large number of options to choose from. Further the parameter settings and configuration makes it a little complex for the common users.
(c) Calculation of number of days from the base date
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Average due date = Base date Sumof Product Sum of Amount + |
25,79,000
= 5.3.2009 +
= 99 days
26,000
The date of the cheque will be 99 days from the base date i.e.12.6.2009. 12th June, 2009, all bills will be settled by a single cheque payment.
So on
In the books of X Co. Ltd. Journal Entries
(d)
Rs. |
Rs. | |||
1.10.2008 |
Employee compensation expense A/c To Employee stock option outstanding A/c (Being the grant of 20,000 stock options to employees at Rs.50 when market price is Rs.120) |
Dr. |
14,00,000 |
14,00,000 |
10.12.08 |
Bank A/c |
Dr. |
8,00,000 | |
to 31.3.09 |
Employee stock option outstanding A/c To Equity share capital A/c |
Dr. |
11,20,000 |
1,60,000 |
To Securities premium A/c (Being shares issued to the employees against the options vested to them in pursuance of Employee Stock Option Plan) |
17,60,000 | ||
31.3.09 |
Employee stock option outstanding A/c Dr. To Employee compensation expense A/c (Being reverse entry passed for lapse of 4,000 stock options) |
2,80,000 |
2,80,000 |
31.3.09 |
Profit and Loss A/c Dr. To Employee compensation expense A/c (Being transfer of employee compensation transferred to Profit and Loss Account) |
11,20,000 |
11,20,000 |
22
As per para 63 of AS 26 Intangible Assets, there is a rebuttable presumption that the useful life of an intangible asset will not exceed ten years from the date when the asset is available for use. Amortisation should commence when the asset is available for use.
It is assumed that debentures were redeemed at the beginning of the year.
It is assumed that current investments cannot be liquidated within short duration of 3 months, therefore it has not been considered as part of cash and cash equivalents.
Attachment: |
Earning: Approval pending. |