Gujarat University 2005 B.Com Third Year - Adv Account & Auditing -V - Question Paper

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Advanced Accounting and Auditing Paper - V

Time : 3 Hours    [Total Marks : 70

Instructions : (1) Figures to the right indicates the marks.

(ii) Answers of both the sections are to be written in ONE Answer Book.

SECTION - I

1. The following are the balances extracted from the books of PROGRESSIVE BANK LTD as on 31-Mar-2004.    12

Particulars    Rs.

Interest earned    22,00,000

Other Income    4,00,000

Interest paid    10,00,000

Operating Expenses    7,00,000

Capital    5,00,000

Reserves and surplus    4,00,000

Deposits    30,00,000

Borrowings    2,00,000

Other Liabilities and provisions    3,00,000

Cash on hand and Balance with RBI    5,00,000

Balance with other banks    3,00,000

Investments    4,00,000

Advances    36,00,000

Fixed Assets    4,00,000

Other Assets    1,00,000

Additional Information :

The following provisions are to be made:

a)    For doubtful debt on advances:

On Loss assets of Rs. 80,000 - @ 100%.

On Sub-standard assets of Rs. 2,00,000 - @ 10%.

b)    Provision for taxation - Rs. 2,00,000.

c)    Statutory Reserves as required by law.

From the above information, prepare Profit and Loss Account in Form B and Balance Sheet in Form A as prescribed under the Banking Regulation Act, 1949.

OR

1. (A) Write short notes (Any TWO).    6

1. Statutory Reserves    2. Classification of Advances.

3. Rebate on bills discounted. 4. Bills of collection.

(B) Prepare the following Schedules with imaginary figures.

1.    Schedule - 3 Deposits OR Schedule - 9 Advances.

2.    Schedule - 14 Other Income OR Schedule - 16 Operating Expenses.

On 1/4/2004, PRASHANT LTD agreed to absorb ANUVI LTD on the following conditions :

1.    The fixed assets of both the Companies includes Land and Building & Machinery in the proportion 3 : 1. The value of Land and Building as shown in the books is 10% less than the market value, whereas the market value of Machinery is 10% less.

2.    The market value of Current Assets are Rs. 4,65,000 and Rs. 1,00,000 respectively.

3.    The Equity shares of both the Companies are of Rs. 100 each, paid up to the extent of Rs. 80 and Rs. 50 per share respectively.

4.    The purchase consideration is to be satisfied by issuing necessary shares ofPRASHANT LTD in exchange of shares of ANUVI LTD on the basis of intrinsic value of their shares.

Prepare necessary ledger accounts in the books ofANUVI LTD and Balance Sheet ofPRASHANT

LTD after absorption.

OR

2. The following is the Balance Sheet of PARUL LTD as on 31-Mar-2004.

1.    A new company PARUMINA LTD to be formed with an authorised capital of Rs. 15,00,000 divided into 1,00,000 Equity Shares and 50,000 10% Preference Shares of Rs. 10 each to take over the business of PARUL LTD except Investments, Bills Payable and Cash balance of Rs. 40,000.

2.    PARUMINA LTD will issue EIGHT Equity Shares as fully paid at 10% premium for every ONE Equity Share of PARUL LTD.

3.    PARUMINA LTD will issue FOUR Preference Shares as fully paid for every ONE Preference Share of PARUL LTD.

4.    PARUMINA LTD will issue its 10% Debentures ofRs. 100 each at 10% Discount to discharge the liability of Debentures of PARUL LTD at 8% premium.

5.    Rs. 20,000 in cash for Liquidation Expenses.

6.    The cost of liquidation expenses amounted to Rs. 15,000 paid by PARUL LTD.

7.    Investments realized 80% of its book value.

Prepare necessary ledger accounts including Reconstruction Account in the books of PARUL

LTD and pass necessary entries in the books of PARUMINA LTD.

3. (A) The following is the Balance Sheet of BHUMIKA LTD as on 31-Mar-2004.    5

The value of Goodwill as shown in the books is 80% of its real value.

The Fixed Assets as shown in the books are at its market value, being 25% more than the cost, whereas the market value of Current Assets are 10% less.

Total Profits of the Company before Taxes @ 35% for the last five years is Rs. 10,00,000 and expected rate of return is 13%.

Calculate the value of Goodwill by capitalisation of average profit method.

OR

The market value of all the assets of the Company is 20% more than the book value.

The average profit of the Company after taxes @ 35% is Rs. 1,80,000 and expected rate of return is 10%.

Calculate the value of both the Shares as per Intrinsic Value Method and Yield Method.

OR

3. (B) Write notes on Intrinsic Value, Market value and Fair Value of Shares.

SECTION - II

4. (A) State, in brief, the provisions of the Companies Act, 1956 in respect of ANY ONE of the

following :    5

1.    Issue of Shares at discount OR at a premium.

2.    Interest paid out of capital u/s. 208.

OR

4. (A) State the duties of an Auditor in respect of ANY ONE of the following under the Companies

Act, 1956.    5

1. Share transfer OR Issue of Debentures.

2. Provision for Depreciation.

4.    (B) Write short notes (ANY TWO).

1.    Right Shares and Bonus Shares.

2.    Divisible Profit.

3.    Cost Audit Programme.

4.    Minute Books.

5.    (A) Prepare an audit programme of ANY ONE of the following.

1.    Educational Institution.

2.    Manufacturing Unit.

OR

5. (A) How will you investigate ANY ONE of the following.

1.    Purchase of running business.

2.    When fraud is suspected in the business.

5. (B) Explain the difference of ANY TWO from the followings.

1.    Audit Report and Audit Certificate.

2.    Tax Audit and Financial Audit.

3.    Interim Dividend and Final Dividend.

4.    Reserves and Provisions.

6. Attempt ANY THREE of the followings.    12

(A)    State the time limit provided in the Companies Act for the followings :

i)    For holding Annual General Meeting.

ii)    For holding Statutory Meeting.

iii)    For issue of Shares at discounts.

iv)    For entering the minutes in the Share Holders minute book.

(B)    As a Tax Auditor of a Partnership Firm for the year ended 31^st March 2004, how will you deal with the followings :

i)    Accepted a deposit of Rs. 25,000 in cash.

ii)    Purchase of Raw Materials worth Rs. 30,000 in cash.

iii)    Life Insurance premium of one of the partner amounting to Rs. 5,000 debited to Insurance Premium Expenses A/c.

iv)    Depreciation amounting to Rs. 25,000, being 25% on the machinery worth Rs. 1,00,000/- purchased on 1.1.2004 has been debited to Profit and Loss Account.

(C) Ascertain the profit available for dividend for the year 2003-04 from the following details of AASHNA LTD.

(D) Give any FOUR sources of creating secret reserve.

TC-18    12