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Management Accounting
Time: 3 hours October - 2004 Marks: 100
 

Q.1.

Following are the Balance Sheets of C Ltd. as at 31st March, 2003 and 31st March, 2004:-

 
 

Liabilities

31-03-03
Rs.

31-03-04
Rs.

Assets

31-03-03
Rs.

31-03-04
Rs.

Equity Share Capital

65,000

1,00,000

Land & Buildings (At cost)

29,000

45,000

Profit & loss Account

25,000

37,400

Furniture (At cost)

16,000

11,000

Sundry Creditors

99,999

1,11,111

Motor Vehicle (At cost)

20,000

41,000

Bills Payable

20,001

18,889

Investments(Long Term)

52,100

46,600

Accumulated Depreciation :

Land & Building

Furniture

Motor Vehicle

12,000

6,000

9,000

9,000

5,600

17,000

Inventory

62,500

97,600

     

Book Debts

39,900

34,100

     

Cash in hand

17,500

23,700

 Total

2,37,000

2,99,000

 Total

2,37,000

2,99,000

 
 

Additional Information:

 
 

i) Building costing Rs. 19,000 accumulated depreciation thereon being  Rs. 8,000 was sold for Rs. 25,000..

 
 

ii) No furniture was purchased during the year, however, part of the furniture on which accumulated depreciation provided Rs. 1,000 was sold for Rs. 2,500.

 
 

iii) Investments are recorded in the books at cost price. Part of the investments being worthless were written off during the year.

 
 

You are required to prepare:

(a) Statement showing in detail, item-wise increase and decreases in working capital.

(b) Statement of sources and Application of funds.

(c) Other working notes.

 
     

Q.2.

Following financial statements are of XYZ Ltd. for 2004

Trading and Profit Loss A/c for the year ended 31st March, 2004.

 

Rs.

 

Rs.

To opening stock

70,000

By Sales

16,60,000

To Purchases

15,00,000

By Closing Stock

1,60,000

To Gross Profit

2,50,000

   
       
 

18,20,000

 

18,20,000

To Depreciation

36,000

By Gross Profit

2,50,000

To Other Expenses

74,000

By Commission

10,000

To Tax Provision

40,000

   

To Proposed Dividend

16,000

   

To Net Profit

94,000

   
 

2,60,000

 

2,60,000

16

 

Balance Sheet as at 31st March 2004

 
 

Share Capital

3,00,000

Cash

48,000

Bank Overdraft

38,000

Stock

1,60,000

Creditors

34,000

Debtors

1,38,400

Provision for Depreciation

54,000

Land and Building

92,000

Provision for tax

40,000

Machinery

1,28,600

Proposed Dividend

16,000

Goodwill

20,000

Profit & Loss A/c

1,80,000

Loan and Advance

60,000

   

Preliminary Expenses

15,000

 

6,62,000

 

6,62,000

 
 

Re-arrange the above in a vertical form & also calculate:

(a)   Stock Turnover Ratio.

(b)   Debtors Turnover Ratio.

(c)   Creditors turnover Ratio.

 
     

Q.3.

From the following Balance Sheets as on 31st March, 2003 & 31st March, 2004 of M/s Dhoom Pvt. Ltd. prepare common Size Financial Statements in vertical form.

16

 

Liabilities

2003
Rs.

2004
Rs.

Assets

2003
Rs.

2004
Rs.

Share Capital

4,00,000

5,00,000

Fixed Assets

5,40,000

6,72,000

General Reserve

20,000

40,000

Investments

1,30,000

90,000

Profit & Loss A/c

50,000

60,000

Stock

90,000

85,000

12% Debentures

1,00,000

1,50,000

Debtors

25,000

45,000

Creditors

1,35,000

45,000

Bills Receivable

--

35,000

Proposed Dividend

40,000

50,000

Cash

10,000

5,000

Provision for Tax

60,000

80,000

Bank

8,000

--

Bank Overdraft

--

10,000

Misc. Expenditure

2,000

3,000

 Total

8,05,000

9,35,000

 Total

8,05,000

9,35,000

 
     

Q.4.

From the following Trial Balance of Jyoti Ltd. as on 31st March, 2004, prepare vertical Revenue Statement for the year ended 31st March, 2004 & vertical Balance Sheet as on that date after making the necessary adjustments:

16

 

Particulars

Rs.

Rs.

Equity Share Capital

 

11,00,000

Plant & Machinery

12,00,000

 

Sales

 

37,00,000

Purchases

17,00,000

 

Sundry Debtors

9,00,000

 

Sundry Creditors

 

8,50,000

Wages

3,50,000

 

Opening Stock

1,20,000

 

Salaries

1,80,000

 

Advertisement

75,000

 

Telephone Charges

35,000

 

Furniture

2,00,000

 

Investments (Long Term)

5,00,000

 

Interest Received

 

40,000

Loss on Sale of Furniture

20,000

 

Commission

60,000

 

Profit & Loss A/c

 

1,20,000

Interim Dividend

50,000

 

General Reserve

 

1,00,000

Cash at Bank

3,20,000

 

Bills Receivable

2,00,000

 
 
 

Adjustments:

 
 

(1)   Stock on 31st March, 2004 was valued at Rs. 3,00,000.

(2)   Make Provision of Rs. 3,00,000 for Income Tax.

(3)   Depreciate Plant & Machinery @ 20% & Furniture @ 10%.

 
     

Q.5.

Aryan ceremics is going  to produce and sale 5000 units per month in the year 2004.

16

 

The material required per unit is Rs. 550. The direct Labour is Rs. 12,00,000 per month. The expenses are Rs. 1,26,00,000 p.a. The sale price is fixed by calculating profit at 20% on sale price.

 
 

Calculate requirement of working capital for 2004 by taking into consideration following information:

 
 

(1)   Stock of raw material will be two months.

(2)   Process time is one month.

(3)   Stock of finished goods will be 1.5 months.

(4)   Credit allowed to 50% customer’s two months on acceptance of bill & balance 50% customers given one month credit.

(5)   25% of expenses are paid one month in advance & balance 75% is paid after one month.

(6)   Time lag in payment of wages is one month.

(7)   20% of material is purchased on cash basis & suppliers of 80% material give 1.5 months credit.

(8)   Cash required is 15% of net working capital.

 
     

Q.6.

Complete the following comparative statement of Swaraj Pvt. Ltd. by ascertaining the missing figure.

16

 

Comparative Balance Sheet as on 31st December

 
 

Particulars

2002

Rs.

2003

Rs.

Absolute Increase or Decrease Rs.

% Increase or Decrease Rs.

(A) SOURCES OF FUNDS

       

     Equity Share Capital

1,20,000

1,20,000

-

-

Reserves & Surplus

20,000

48,000

?

?

OWNER’S FUNDS

1,40,000

1,68,000

?

?

         

BORROWED FUNDS:

       

10% Debentures

?

?

   

TOTAL FUNDS AVAIABLE (A)

1,60,000

2,00,000

?

?

(B) APPLICATION OF FUNDS:

       

(a) Fixed Assets

80,000

?

?

+75%

(b) Working Capital:

       

(i) Current Assets:

       

    Inventories

50,000

?

(-) 10,000

?

    Receivables

?

56,000

(-) 40,000

?

    Cash

?

24,000

(-) 6,000

?

Total Current Assets

1,40,000

1,20,000

(-) 20,000

?

      (ii) Current Liabilities

       

           Creditors

?

?

-

-

Working Capital (i-ii)

80,000

60,000

?

?

APPLICATION OF FUNDS (B) (a+b)

1,60,000

2,00,000

?

?

 
     

Q.7.

You are required to prepare cash flow statement as per AS-3 for the year ended 31-12-03 from following Balance Sheet as on 31st December and additional information of ATKT Ltd.

16

 

Liabilities

2002

Rs.

2003

Rs.

Assets

2002

Rs.

2003

Rs.

Share Capital

5,00,000

7,50,000

Building

1,00,000

2,90,000

Share Premium

50,000

75,000

Machinery

90,000

2,70,000

Profit & Loss A/c

--

13,000

10% Investment

1,00,000

1,00,000

12% Debentures

1,00,000

1,00,000

Stock

3,70,000

2,94,000

Creditors

80,000

50,000

Debtors

58,000

49,000

Bank Overdraft

--

10,000

Advance Tax

5,000

60,000

Tax provision

6,000

68,000

Cash

5,000

6,000

Bad Debts Provision

4,000

6,000

Bank Balance A/c

6,000

--

O/s Debenture Interest

6,000

3,000

Profit & loss A/c

7,000

--

     

Share Issue Expenses

5,000

--

Total

7,46,000

10,75,000

Total

7,46,000

10,75,000

 
 

Additional Information:

(1) Share issue expenses incurred in the year Rs. 2,500.

(2) Depreciation provided on Building Rs. 10,000 & Machinery Rs. 20,000

 
     

Q.8.

 (a)

State with reasons whether the following statements are True or False:

(1)   The term ‘Flow’ refers to the movement of funds between two Balance Sheets dates.

(2)   Higher Stock to Working Capital Ratio is an indication of lower investment in stock.

(3)   Cash Flow Statement is now mandatory.

(4)   When closing stock is overvalued Gross Profit Ratio for that year increases.

(5)   Current Ratio ignores the quality of Working Capital.

10

(b)

Write short notes (any two):

(1)   Seasonal working capital

(2)   Common Size Financial Statements.

(3)   Window Dressing of Current Ratio.

6

     

Q.9.

Complete the following Statement of changes in Working Capital:

16

 

Pitamber Ltd.

 
 
   

Changes in Working Capital

Particulars

30-09-2003

(Rs.)

30-09-2004

(Rs.)

Increase

(Rs.)

Decrease

(Rs.)

(A) CURRENT ASSETS

       

     Stock in Trade

?

?

3,90,000

?

     Cash at Bank

1,50,000

?

 

50,000

Total (A)

?

?

   

(B) CURRENT LIABILITIES

       

     Sundry Creditors

?

?

 

?

     Bills Payable

1,00,000

?

 

50,000

Total (B)

?

?

   

Working Capital (A-B)

?

4,00,000

   

Increase in Working Capital

1,00,000

     
 

?

?

?

?

 
 

Additional Information:

(1) Current Ratio of the company on 30th September, 2003 is 2:5:1 and on 30th September, 2004 it is 2:1.

(2) Liquid Ratio of the Co. on 30th September, 2004 is 1:5:1.

 
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