Adikavi Nannaya University (ANU) 2009 LL.M Financial accounting - Question Paper

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Marks
Q. four ?F?, ?A? and ?M? have been in partnership for several years, sharing profits and losses in the
ratio 3:2:1. Their last balance sheet which was prepared on December 31, 2010 is as follows:
Balance sheet of F, A and M as at December 31, 2010
Non-current assets Rs.
At cost 300,000
Less depreciation (90,000)
210,000
Current assets
Inventory 75,000
Accounts receivable 315,000
390,000
Total assets 600,000
Current liabilities
Bank overdraft 195,000
Accounts payable 255,000
Total liabilities 450,000
Capital
F 60,000
A 60,000
M 30,000
150,000
Total liabilities and capital 600,000
One of the dependent customers Mr. ?S? having balance of Rs.270,000 has now become
insolvent. Due to this fact, ?F?, ?A? and ?M? have agreed to dissolve the partnership on the
subsequent terms:
(i) The inventory is to be sold for Rs.60,000.
(ii) The non-current assets will be sold for Rs.120,000 other than for certain items with a book
value of Rs.75,000, which will be taken over by ?F? at an agreed evaluation of Rs.105,000.
(iii) The accounts receivable (debtors), other than for Mr. ?S?, are expected to pay their accounts
in full.
(iv) The costs of dissolution will be Rs.12,000 and accounts payable (creditors) will be paid
Rs.247,500 in full settlement. ?M? is unable to meet his liability to the partnership out of
his personal funds, so it will be settled by ?F? and ?A? in the ratio of 3:2.
Required:
(a) Prepare the realisation account; 08
(b) Workout the capital accounts of the partners recording the dissolution of the partnership. 12
Q. five (a) The accountant has obtained the subsequent details of transactions for Imran?s shop for the
year ended December 31, 2010:
(i) The sales are mostly on credit. No record of sales has been kept, but amounts of
Rs.2,400,000 by cheque and Rs.675,000 in cash have been received from credit
customers.
(ii) Amount paid by cheque to suppliers during the year was Rs.1,580,000.
(iii) Expenses paid during the year by cheque: rent Rs.190,000; general expenses
Rs.15,500; by cash: rent Rs.20,000.
(iv) Imran took Rs.12,500 cash per week (for 52 weeks) as drawings.
(v) Other information:
At 31.12.2009 (Rupees) At 31.12.2010
Accounts receivable 275,000 330,000
Accounts payable for goods 80,000 130,000
Rent owing ? 17,500
Bank balance 282,500 897,000
Cash balance 16,000 21,000
Inventory 318,000 340,000
Non-current assets (net) 165,000 148,500
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Marks
Required:
Calculate;
(i) Opening capital. 02
(ii) Credit purchases and credit sales. 04
(iii) Cash account. 02
(iv) Rent charged in income statement. 02
(b) describe the subsequent as per IAS-1:
(i) Going concern 02
(ii) Offsetting 01
(iii) Material omissions or misstatement 02
Q. six The subsequent trial balance has been extracted from the books of MHA Limited as on
December 31, 2010:
Rs. ?000? Rs. ?000?
Particulars Debit Particulars Credit
Long-term investment 18,000 Allowance for doubtful debts (01/01/2010) 450
Accounts receivable 5,000 Accounts payable 3,000
Freehold land 20,000 Sales 35,000
Buildings (cost) 7,500 12% long-term loan (01/01/2010) 6,500
Furniture (cost) 2,000 Income from investment 225
Cash at bank 4,500 Accumulated depreciation
Cash in hand 700 (01/01/2010):
Cost of goods sold 26,000 Building 500
Salaries 1,500 Furniture 400
Inventory (December 31, 2010) 4,000 Ordinary share capital 40,000
Misc. selling expenses 800 Share premium 1,000
Interest 390 Retained earnings 3,000
Bad debts 100 General reserve 475
Repair and maintenance 60
Total 90,550 Total 90,550
Additional Information:
(i) The company has an authorized capital of 10,000,000 ordinary shares of Rs.10 every.
(ii) Accrued repair and maintenance expenses were Rs.10,000.
(iii) The total of salaries, and repair and maintenance expenses are apportioned 50% every in
selling and administrative expenses.
(iv) Allowance for doubtful debt is to be adjusted to 10% of account receivable.
(v) Depreciation charged in administrative expenses, on building @ 2% and on furniture
@10% by straight-line method.
(vi) Provision of taxation is to be made @ 35%. Interest on 12% long-term loan is outstanding
for 6 (6) months.
(vii) Rs.623,750 is to be transferred to general reserve.
Required:
Prepare the subsequent financial statements in accordance with International Accounting
Standards IAS-1 (revised):
(a) Income Statement for the year ended December 31, 2010 (showing classification of
expenses by functions).
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(b) Statement of modifications in Equity for the year ended December 31, 2010. 05
(c) Statement of Financial Position as at December 31, 2010. 10

Earning:   Approval pending.