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Management Accounting
Time: 3 hours
April -1997
Marks: 100
 
Q.1. The following are the summarised Balance Sheets of Archna Polygraph Limited as on 31st March, 1995 and 1996.
 
 
Liabilities
31-3-95
Rs.
31-3-95
Rs.
Assets
31-3-95
Rs.
31-3-95
Rs.
Share capital
4,60,000
4,60,000
Land & Building
3,00,000
3,00,000
Profit & Loss A/c.
32,000
46,000
Machinery
1,04,000
1,40,000
Reserve for contingency
1,20,000
1,20,000
Investments
2,20,000
1,48,000
8% Debentures
1,80,000
1,40,000
Stock
1,64,000
2,12,000
Depreciation Fund
80,000
88,000
Debtors
1,34,000
86,000
Creditors
2,06,000
1,92,000
Cash
1,80,000
1,80,000
Outstanding liability for Expenses
26,000
24,000
Prepaid expenses
2,000
4,000
 
11,04,000
10,70,000
 
11,04,000
10,70,000
 
  Additional Information:
 
  i) 10% Dividend was paid during the year 1996.
 
  ii) Machinery for Rs. 6,000 was purchased and old machinery costing Rs. 24,000 (accumulated depreciation Rs. 12,000) was sold for Rs. 8,000.
 
  iii) Rs. 40,000 8% Debentures were redeemed by purchase from open market at Rs. 96 for a Debentures of Rs. 100.
 
  iv) Investment worth Rs. 72,000 were sold at book value. You are required to prepare a schedule of changes in working capital and a statement showing sources and application funds.
 
   
 
Q.2. The Balance Sheet of Yash Ltd. as on 31st December, 1995, 1996 are as under: (Figures in thousand)
16
 
Liabilities
31/12/95
Rs.
31/12/96
Rs.
Assets
31/12/95
Rs.
31/12/96
Rs.
Equity Share Capital
350
400
Fixed Assets
210
320
General Reserve
20
-
Stock
90
140
Profit and Loss Account
40
-
Sundry Debtors
60
55
Secured Loan
-
180
Bill Receivable
50
75
Sundry Creditors
30
45
Investments
70
40
Bills Payable
50
25
Cash
30
20
Outstanding Expenses
10
30
Profit and Loss A/c
--
30
Unpaid Dividend
10
-
     
 
510
680
 
510
680
 
  Accumulated Depreciation was Rs. 60,000 on 31st December, 1995 and on 31st December, 1996. It was Rs. 57,000.
 
  Machinery having written down value Rs. 90,000 was sold for Rs. 15,000 on 1/7/1996.
 
  Plant costing Rs. 23,000 purchased on 1st July, 1996. Prepare -
 
  Statement showing cash from operations.
 
  Statement of cash flow for the ended 31st December, 1996.
 
   
 
Q.3. The Balance Sheets of contractors Ltd., as on 31st December, 1996 and 1997 were as follows: (Rs. In thousand)
16
 

1996

Liabilities

1997

1996

Assets

1997

1,500

Equity Share Capital

1,700

1,800

Fixed Assets

2,100

500

12% Preference Share

400

550

Sundry Debtors

650

570

Reserve

770

430

Bills Receivable

525

300

10% Debentures

450

380

Stock

460

240

Creditors

320

20

Prepaid Expenses

30

50

Bills Payable

70

80

Bank Balance

65

100

Bank Overdraft

120

     

3,260

 

3,830

3,260

 

3,830

 
  During the year 1997, total sales were Rs. 1,20,00,000 and cash sales were 20% of total sales. Stock turnover ratio was 20 times. Net profit before payment of taxes at 50% was Rs. 18,00,000.
 
  There were no, non-operating expenses and non-operating incomes.
 
  Calculate the following Rates for the year 1997:
 
  i) Gross Profit Ratio.
 
  ii) Operating Ration.
 
  iii) Current Ratio.
 
  iv) Debtors turnover ratio and collection period.
 
  v) Return on capital employed.
 
   
 
Q.4. Power Link Ltd. furnishes the following information and requests you to prepare statement showing the requirement of working capital for the year 1998.
16
 
 
Budget for 1998
Production Capacity for the year
20,000 units
Production
90%
Cost Structure  
Crude Material
Rs. 30/- per unit
Other Direct Material
Rs. 30/- per unit
Wages
Rs. 30/- per unit
Overhead
Fixed p.m. Rs. 9,000/- and Rs. 15/- variable per unit
Profit
20% on sales
 
  Other Information:
 
  i) Crude material remains in stock for 2 months.
 
  ii) Other direct materials remains in stock for 1 month.
 
  iii) Finished goods remains in stock for 2 months. (to be valued at direct cost)
 
  iv) The production process takes place 1 month W.I.P. valuation to be made crude material plus direct material at cost; plus 50% of wages and variable overheads.
 
  v) Time lag in payment of wages 1 month and variable overheads half month.
 
  vi) Fixed overheads payable quarterly in advance.
 
  vii) Crude material purchased from suppliers against advance payment of two months and other direct material suppliers allows credit of 1 month.
 
  viii) Credit allowed to customers as under: (Valued at sales price)a) 50% of invoice price against acceptance of bill for 4 months.b) 25% of invoice price time lag two months.
 
  ix) Bank balance to be maintained Rs. 50,000/-
 
  x) Production and sales takes place evenly throughout the year.
 
   
 
Q.5. Rearrange the balance Sheet in vertical form and calculate the trend percentage taking 1992 figures as 100 and briefly comment on the same.
16
 
Balance Sheet as on 31st December (Rs. In lacs)
 
 
Liabilities
1992
1993
1994
1995
Assets
1992
1993
1994
1995
Share Capital
60
60
80
80
Building
50
60
55
80
Reserve
50
45
20
20
Goodwill
50
45
40
40
Surplus
13
32
31
40
Machinery
20
40
43
50
Debentures
10
20
20
30
Stock
05
15
25
05
Secured Loans
12
08
10
20
Debtors
20
14
15
10
Creditors
06
08
10
03
Cash
05
01
02
15
Bank Overdraft
01
02
08
04
Preliminary Expenses
03
02
01
-
Other Liabilities
01
02
02
03
         
 
153
177
181
200
 
153
177
181
200
 
Q.6. The account of synthetic Industries submits the following statements for 1996:
16
 
Trading and Profit and Loss A/c. for the year 1996
 
 
 
Rs.
 
Rs.
To Opening Stock
25,000
By Sales
6,25,000
To Purchase
5,00,000
By Closing Stock
25,000
To Gross Profit
1,25,000
   
 
6,50,000
 
6,50,000
To Depreciation on Asset letout
50,000
By Gross Profit b/d
1,25,000
To Other Expenses
30,000
By Returns from Asset letout
80,000
To Tax
40,000
   
To Net Profit
85,000
   
 
2,05,000
 
2,05,000
 
  You are asked to prepare vertical statements and comment upon the same.
 
   
 
Q.7. a) Triveni Ltd. has the following earning last year:
7
 
   
Rs.
   
Rs.
Share Capital  
2,74,000
Cash  
5,000
Sundry Creditors  
80,000
Debtors  
1,00,000
Bank Overdraft  
25,000
Stock  
25,000
Tax Provision Less: Tax paid 40,000
39,000
1,000
Letout Assets Cost Less: Dep. 4,00,000
1,50,000
2,50,000
   
3,80,000
   
3,80,000
 
  Calculate -
 
  i) Earning per share
 
  ii) Price earning ration
 
  iii) Dividend payout ratio.
 
   
 
  b) Following are the balance sheets of Mr. Ketan, a sole Traders as at 31st March, 1994 and 1995.
9
 
Profit before Tax
26,50,000
Tax Rate
40%
Proposed Equity Dividend
25%
Capital Employed  
10% Preference Share Capital
15,00,000
80,000 Equity Shares of Rs. 50/- each
40,00,000
Current Market Price Per Equity
Rs. 125/-
 
  Additional Information -
 
  Depreciation written off against plant Rs. 4,000 and furniture Rs. 1,000.
 
  You are required to prepare -
 
  i) The statement showing the sources and uses of funds during the year.
 
  ii) The statement showing changes in working capital.
 
   
 
Q.8. a) Compute for a new company Taba Ltd. the duration of the operating working capital cycle from the following figures of year 1996 assuming 360 days per year comprising age of raw materials, finished goods, debtors and creditors only.
10
 
1994
Rs.
Liabilities
1995
Rs.
1994
Rs.
Assets
1995
Rs.
  Capital  
10,000
Goodwill
8,000
  Opening Balance
80,000
30,000
Plant
46,000
  Add Capital Introduced
10,000
7,000
Furniture
6,000
  Add Net Profit
7,000
31,000
Investment
57,000
  Less:
Drawings
97,000
6,000
22,000
Stock
17,000
 
15,000
Sundry Debtors
19,500
80,000
Closing Capital
91,000
21,000
Bills Receivable
18,000
45,000
Bank Loan
64,000
18,000
Bank Balance
7,500
12,000
Creditors
10,000
     
17,000
Bills Payable
14,000
     
1,54,000
 
1,79,000
1,54,000
 
1,79,000
 
  b) The following data of Vijay Ltd. is available for year ending 31-3-97
6
 
Raw Material
20,000
Work-in-Process
14,000
Finished Goods
21,000
Purchases
96,000
Cost of Goods sold
1,40,000
Sales
1,60,000
Closing Debtors
32,000
Closing Creditors
16,000
 
  Calculate the following ratios from the above:
 
  i) Return on capital Employed.
 
  ii) Return on Net work or shareholders funds.
 
   
 
Q.9. Write note on any three:
16
  a) Debtors turnover ratio.
 
  b) Trading on equity.
 
  c) Uses of trend analysis.
 
  d) Advantages of computerised accounts.
 
  e) Contingent liability.

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