Question No. 1 is compulsory and carries 20 marks.
Attempt any five questions from remaining questions each carrying 16 marks.
All working notes should form part of your answer.
Proper presentation and neatness is essential.
Section I-(Auditing)
Q.1(a)The Balance Sheets of Dinesh Ltd. are as follows:20
Balance sheet as at 31st March, 2005 and 2006.
Liabilities
2005
2006
Assets
2005
2006
Rs.
Rs.
Rs.
Rs.
Equity share capital
3,00,000
5,00,000
Goodwill
1,10,000
90,000
General Reserve
-
60,000
Land and Building
1,60,000
1,80,000
Profit and Loss A/c
-
58,000
Plant and Machinery
80,000
2,00,000
Debentures
2,00,000
-
Stock
84,000
1,06,000
Sundry Creditors
1,14,000
92,000
Debtors
1,80,000
1,56,000
Bills Payable
60,000
12,000
Advance Income Tax
-
40,000
Provision for Income Tax
-
50,00
Bills Receivable
16,000
24,000
Proposed Dividend
-
40,000
Prepaid Expenses
12,000
8,000
Cash in Hand
20,000
8,000
Profit and Loss A/c
12,000
6,74,000
8,12,000
6,74,000
8,12,000
Additional Information:
During the year ended 31-03-2006. Depreciation of Rs. 16,000 and Rs. 20,000 have been charged on Land and Building and Plant and Machinery respectively.
An Interim Dividend of Rs. 15,000 was paid during the year ended on 31-03-2006.
During the year Machinery having book-value of Rs. 16,000 was sold for Rs. 14,000.
Prepare cash flow statements by Indirect Method for the year ended 31st March, 2006 as per AS - 3.
Q 2.Aman and Ram are partners of M/S Aman Ram sharing Profits and Losses in the ratio of 3:2. Their Balance sheet as on 31st March, 2004 was as under:16
Balance sheet as at 31st March, 2005 and 2006.
Liabilities
Rs.
Rs.
Assets
Rs.
Rs.
Creditors
15,000
Bank
14,000
Reserves
10,000
Cash
3,000
Loan from Sanju
20,000
Debtors
29,000
Capitals:
Less: RDD
1,000
28,000
Aman
30,000
Stock
30,000
Ram
25,000
55,000
Fixed Assets:
Cost
35,000
Less: Depreciation
10,000
25,000
1,00,000
1,00,000
As they wanted to go in for heavy expansion they decided upon the following, during the year ended 31st March, 2005:
Introduce fresh capital of Rs 20,000; Rs. 5,000 being by Aman and Rs. 20,000 being by Ram.
Admit Sanju as a partner on the following terms:
(a) Aman, Ram and Sanju are to share profits and losses in the ratio of 2:2:1.
(b)Goodwill of the firm is worth Rs. 30,000 but it is privately settled by the partners without bringing it into the books of account of the firm.
(c)Sanju's loan is to be converted into his capital.
(d)Sanju is to bring in a further sum of Rs. 26,000.
M/s Aman purchased on 1st April, 2004 new fixed assets of Rs. 80,000. They sold part of the fixed assets costing Rs. 20,000 on which depreciation provision was Rs. 8,000 for Rs. 10,000. This amount was used to partially finance the purchase of fixed assets. M/s Aman Ram borrowed Rs. 50,000 from Bank of India for the purpose of financing the purchase of fixed assets. Out of this loan Rs. 10,000 was repaid during the year.
Aman, Ram and Sanju withdrew Rs. 16,000, Rs. 15,000 and Rs. 10,000 respectively during the year. You are further informed that the partnership firm tax of Rs. 2,000 was paid during the year. Balance Sheet of the firm as on 31st March, 2005 was as under:
Liabilities
Rs.
Rs.
Assets
Rs.
Rs.
Creditors
30,000
Bank
6,000
Loan from Bank of India
40,000
Cash
6,000
Capitals:
Debtors
60,000
Aman
39,000
Less: RDD
3,000
57,000
Ram
48,000
Stock
50,000
Sanju
43,000
1,30,000
Fixed Assets:
Cost
95,000
Less: Depreciation
14,000
81,000
2,00,000
2,00,000
Prepare a statement showing flow of fund during the year ended 31st March. 2005 along with statement of changes in working capital, together with item wise changes in working capital.
Q.3While preparing the financial statements for the year ended 31-3-2005 of XYZ Ltd., it was discovered that a substantial portion of the records were missing. However, the accountant was able to gather the following data: 16
Liabilities
Rs.
Rs.
Assets
Rs.
Rs.
Paid-up Share Capital
Land
3,60,000
60,000 Equity shares of Rs. 10
6,00,000
Plant and Machinery:
each)
Cost
9,00,000
Reserves and Surplus:
(-) Depreciation
3,60,000
5,40,000
Balance on 1-4-04
1,80,000
Current Assets:
+ Transfer during the year
1,20,000
3,00,000
Stock
?
10% Loan
6,00,000
Debtors
?
Current Liabilities:
Cash and Bank
?
Proposed Dividend
?
Provision for Tax
?
Creditors
?
6,00,000
Total
?
Total
?
The following other information is available:
Current Ratio
2:1
Cash and Bank
30% of Total Current Assets
Debtors Turnover (Sales/Debtors)
12 Times
Stock Turnover (Cost of Goods Sold/Stock)
12 Times
Creditors Turnover (Cost of goods Sold/Creditors)
12 Times
Gross Profit Ratio on Sales
25%
Proposed Dividend
20%
You are required to complete the Balance Sheet as on 31-03-2005 with available information, working notes shall form part of your answer.
Q.4From the following Balance Sheet, prepare Vertical balance sheet which is suitable for analysis and calculate TrendPercentages taking 2003 as base year and comment on it.
16
Balance Sheets as at 31st December
Particular
2005 Rs.
2004 Rs.
2003 Rs.
Share Capital
50,000
50,000
50,000
Reserve and Surplus
5,000
10,000
10,000
Secured Loan
3,00
5,000
5,000
Unsecured Loan
2,000
-
6,000
Current liabilities
5,000
5,000
4,000
65,000
70,000
75,000
Particular
2005 Rs.
2004 Rs.
2003 Rs.
Fixed Assets (Net)
40,000
45,000
50,000
Investment
5,000
7,500
10,000
Stock
7,000
6,000
5,000
Debtors
10,000
9,000
7,000
Cash
3,000
2,500
3,000
65,000
70,000
75,000
Q.5From the information giver, below prepare Balance sheet in a vertical form, suitable for analysis and calculate the following ratios:16
Capital Gearing Ratio.
ProDrietory Ratio.
Current Ratio.
Liquid Ratio.
Stock of Working Capital.
(Rs.)
(Rs.)
Cash at Bank
12,500
Land and Building
2,00,000
Expenses paid in Advance
15,500
Stock
68,250
Creditors
1,01,500
Debtors
1,30,750
Bills Receivable
5,250
Plant and Machinery
1,36,000
12% Debentures
62,500
Loan from Director
1,00,000
Equity Share Capital
2,50,000
(Repayable after three years)
P & L A/c (Cr.)
54,250
Q.6 The following are the Balancesheets of Hayat Ltd. for the year ending 31st March, 2004 and 2005. 16
Liabilities
31-3-04 Rs.
31-3-05 Rs.
Assets
31-3-04 Rs.
31-3-05 Rs.
Equity share capital
4,00,000
4,00,000
Fixed assets less depreciation
4,80,000
9,20,000
Preference share capital
2,00,000
2,00,000
Stock
80,000
40,000
Reserves
40,000
60,000
Debtors
2,00,000
1,50,000
Profit and loss account
30,000
40,000
Bills receivable
40,000
60,000
Bank overdraft
1,00,000
4,60,000
Prepaid expenses
20,000
24,000
Creditors
80,000
1,00,000
Cash at bank
1,00,000
1,66,000
Provision for taxation
40,000
50,000
Proposed Dividend
30,000
50,000
9,20,000
13,60,000
9,20,000
13,60,000
From the above prepare Vertical Balance Sheet suitable for analysis and do Horizontal comparison showing absolute Increase/Decrease and Percentage.
Q.7(a)On the morning of 31st December, 2005, the business had stock costing Rs. 50,000, Debtors Rs. 1,70,000, creditors Rs. 1,90,000 and cash at Bank Rs. 50,000. On that day the business has the following transactions:16
Purchased goods for cash Rs. 5,000 and credit Rs. 20,000.
Sale of Goods for cash Rs. 25,000 (cost of Goods Sold Rs. 20,000).
Collection from Debtors Rs. 45,000.
Paid Rent for Jan. and Feb. 2006 in advance Rs. 20,000.
Payments to creditors Rs. 1,00,000.
All receipts and payments are by cheques.
You are required to compute on the morning and evening of 31st December, 2005,
(i) Current Ratio.
(ii)Acid Test Ratio.
(b)Stock Turnover of X Ltd. is 8 times.4
Sales for the year are Rs. 5,00,000 and Gross Profit Ratio is 25% on cost.
Closing Stock is Rs. 10,000 more than Opening Stock
Find out closing stock.
Q.8 A company plans to manufacture and sell 400 units of domestic appliances per month at price of Rs. 600 each forthe calendar year 2007. The ratio of cost of selling price are as follows: 16
% of selling price
Raw material
30
Packing material
20
Direct lab our
15
Direct expenses
5
Fixed overhead are estimated at Rs. 4,32,000 per annum.
Stock were maintained as per following.
Raw material
30 days
Packing material
15 days
Work in progress
7 days
Finished goods
200 Units
Following additional information is given:
Credit sales represent 80% and customers enjoy 30 working days credit. Balance 20% are cash sales.
Creditors allow 21 working days credit for payment.
Lag in payment in overhead and expenses is 15 working days.
Cash requirements to be 12% of net working capital excluding cash.
Working days in a year are taken as 300.
Prepare working capital requirement for the year 2007.
Q.9 Write short notes on any four: 16
(a) Classification Assets.
(b) Drawbacks of comparative statements in Interpretation of final accounts.
