University of Mumbai 2006 B.A Economics Financial Accounting - Question Paper

Total sales for the post-incorporation period are 3 times the total sales for the pre-incorporation period.
Rate of Interest on debentures is 10% p.a. while on purchase consideration is 9% p.a.
Preliminary expenses should be written off.
Investments are purchased by the proprietor during 2003-04.
Prepare Trading and Profit & Loss Account for the Year ending 31-03-2005 showing the treatment of Pre-incorporation and post-incorporation profits separately. Prepare Balance Sheet as on the identical date.


Q.4(a) Nandlal imported goods from US company worth US $ five lac on 10-08-2004 when exchange rate 16 was US $ one = Rs. 42.90. He agreed to pay five installments as below: 16
Date Installment (Us S) Rate of Exchange (Rs.)
10-10-2004 75,000 42.75
10-12-2004 1, 50,000 43.50
10-02-2005 60,000 44.80
10-04-2005 75,000 42.90
10-06-2005 Balance 43.00

The rate of exchange was Rs. 43.00 as on 31-03-2005. Pass journal entries [including those for cash] in the books of Nandlal in accordance with AS-11.

b) Madhav exported goods to US Company worth US $1 lac on 01-03-2004 when exchange rate was US $ one = Rs. 43.00. The payment was received as below:—
Date Installment (Us S) Rate of Exchange (Rs.)
01-02-2004 20,000 (Advance) 43.25
15-03-2004 25,000 43.50
01-05-2004 Balance 42.75

The rate of exchange was US $ one = Rs. 43.75 as on 31-03-2004.
Pass journal entries in the books of Mr. Madhav [including those for cash] in accordance with AS
Q.5 'Following is the Balance sheet of NINAD LTD. as on 31-03-2005:— 16
Liabilities Rs. Assets Rs.
Equity Shares of Rs. 10 every 5, 00,000 Fixed Assets 7, 00,000
8% Preference Shares of Rs. 100 every 1, 00,000 Current Assets 4, 80,000
7.5% Debentures of Rs. 100 every 2, 00,000 Preliminary Expenses 20,000
Unsecured Loans 1, 00,000
Reserve and Surplus 2, 00,000
Current Liabilities 1, 00,000
12, 00,000 1,20,000

Additional info
Details of Sales Expenses and Interests for the last 5 years for the year ended are as under: Particulars 31.03-2001 31.03-2002 31.03-2003 31-03-2004 31-03-2005
Rs. Rs. Rs. Rs. Rs.
Sales 4,50,000 5,50,000 7,00,000 4,00,000 8,00,000
Expenses 1,75,000 2,90,000 3,00,000 1,55,000 4,00,000
Interest on Loan 10,000 20,000 25,000 30,000 10,000
Interest on Debentures 15,000 15,000 15,000 15,000 15,000

Rate of Income tax is 40%
Normal rate of return is 12.5%

Earning:   Approval pending.