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USN 05MBA14

First Semester MBA Degree Examination, May/June 2010

 ccounting for anagers

Time: 3 hrs. Max. Marks: 100

Note: 1.Answer any Four full questions from Q No l to Q No2. Q No 8 is compulsory

1 a. What isBookkeeping? (03Marks)b. Journalisethe followingtransactionsin the booksofa trader: Debit BalancesonJan 1,2008.

Cash inhandRs 8000 ; Cashat BankRs 25,000 ; Stockof GoodsRs 20,000 ;

FurnitureRs- 2000 ; BuildingsRs 10,000 ; Sundrydebtors: Vijay- Rs 2000, Anil-Rs 1000 and Madhu - Rs 2000. Credit Balances on Jan 1, 2008. Sundry creditors: Anand

Rs. 5000 ; Loan from Babu - Rs 10,000.

Following were further transactions in the month of January 2008. (07Marks)

Jan 1: Purchased goods worth Rs 5000 for cash less 20% trade discount and 5%cash discount.

Jan 4: Received Rs 1980fromVijay and allowed him Rs 20 as discount.

Jan 8: Purchase plant from Mukesh for Rs 5000 and paid Rs 100 as cartage for

bringing the plant to factory and another Rs 200 as installation charges.Jan 12: Sold goods to Rahimon credit Rs 600.

Jan 15: Rahimbecame an insolventand could pay only 50 paise in a rupee.

Jan 31: Withdrew goods frombusiness for personal use Rs 200.

c. Explain the need and significance of auditing of a company account. (10Marks)

2 a. Whatarecontraentries?

b. PreparestocksledgerAlc usingLIFOmethod ofpricing:

1st Sept.2004.Opening balance300kgs@ Rs 25perk ; 3rdSept2004.Purchased500kgs@ Rs 26.60 ; 4th Sept 2004. Issued 220 kg ; 10 Sept 2004. Issued 440 kgs ; 20thSept

2004. Purchased 490 kgs @ Rs 23 ; 25th Sept 2004. Issued 300 kgs ; 26th Sept 2004.

Surplus 20 kgs returned to stores out of issues on 4thAugust. (07Marks)

c. From the following Balance sheet of 'X' Ltd, prepare for 2007.

i) Schedule of changes in working capital. ii) Funds flow statement.

(03Marks)

(10 Marks)

..

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un --u

Liabilities 31stMar 31stMar Assets 31stMar 31stMar2006 2007 2006 2007

Equity sharecapital 150 200 Goodwill 50 40

9% redeemable 75 50 Land & 100 85preferenceshares Buildings

Capital reserve - 10 Plant 40 100

General reserve 20 25 Investments 10 15

Profit & loss Ale 15 24 SundryDebtors 70 85

ProposedDividend 21 25 Stock 39 55

Sundrycreditors 13 24 BIR 10 15

B/P 10 8 Cash inhand 7 5

Liability for expenses 15 18 Cashat Bank 5 4

Provision for Tax 20 25 Preliminary 8 5

expensesTotal 339 409 339 -409

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Additional Information:

i) A part of landwas sold out in 2007and the profitwas creditedto capital reserve.H) A machine has been sold for Rs 5000 [Written down value of the machinewas Rs 6000].DepreciationofRs 5000was chargedonplant in 2007.

iii) An interimdividendofRs 10,000has beenpaid in2007.iv) An amountof Rs 1000has beenreceivedbyway of dividendon investmentin2007.

a. What is DPS?DistinguishbetweenDPSandEPS. 03Marks)

b. Explain the differentaccountingconcepts. 07Marks)c. Raj Enterprisespurchasedsecond handmachineryon 1stApril 1997for Rs 3,70,000and installedat a cost of Rs 30,000.On 1st Oct 1998,it purchased anothermachine for Rs 1,00,000and 1stOct 1999, it soldoff the first machinepurchasedin 1997forRs 2,80,000.On the same date it purchased a machinery for Rs 2,50,000. On 1st Oct 2000, the secondmachinerypurchasedforRs 1,00,000wassold off forRs20,000.

In the beginningdepreciationwas provided on machineryat the rate of 10 p.a. on theoriginal cost each year on 31st March. From the year 1998 - 99, however the trader changed themethod of providing depreciation and adopted written down value method, depreciationratebeing15 p.a.Preparemachineryaccountfor theperiod1997- 2001. 10Marks)

a. Distinguish between trade discount and cash discount. 03Marks)

b. Enter the following transactions in a three column cash book. 07Marks)Rs

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c. With the help of the following ratios regarding Indus Films, draw the balance sheet of the

company for the ear 2008 : 10Marks)Current Ratio 2.5

Li uidi Ratio 1.5

Net workin ca ital Rs 3,00,000

Stock turnover ratio cost of sales   cIosin stock) 6 timesGross rofit ratio 20 ercent

Fixed Assets turnover ratio on cost of sales) 2 timesDebt collection eriod 2 months

Fixed assets to shareholdersnet worth 0.80

Reserve and Surolus to caDital 0.50

5 a. What ismanagementreporting?

b. Showthe accountingequation on the basisof the followingtransactions:i) Startedbusinesswith Rs 10,000; ii) Purchased goodsfor cash Rs 3000 ; Hi) Purchased

goods on creditRs  ; iv) PaidsalaryRs 200 ; v) WithdrewcashforpersonaluseRs 300 ; vi) Received commissionRs 300; vii) Soldgoods costingRs 1500on creditfor Rs 200 ; viii) Further capital introducedRs 2000 ; ix) Cash receivedfromdebtorsRs 800 ; x) Bank load receivedRs 3000. 07Marks)

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 3 Marks)

2007 Cash Balance  Bank Balance 1000June 1

3 Goods sold 7004 Paid into bank 55005 Paid to Swamyby cheque Rs 1250.Discount receivedRs 125 5000

8 Paid wages 30018 Receivedfrom Jain in cheque and sent to bank Rs 600,discount allowed Rs30

20 Drawn frombank 500

22 Paid officesalary in cash 400

28 Sold sharesfor cash and banked the same 80029 Paid rent by cheque 10030 Paid intobank 750

30 Cheque of Rs 100 is issued for rent dishonoured due to difference in signature

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c. Thefoil h . dbal h f D 2006 d 2007

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AdditionalInformation: Duringtheyear ended Dec 2007:

i) DividendofRs 23,000was paid.ii) Assets of another company were purchased for a consideration of Rs 50,000 payable inshares. Thefollowingassetswerepurchased: Stock- Rs 20,000 ; Machinery- 25,000.

iii) Machinerywas further purchasedRs 8000. iv) epreciation written off on machineryRs 12,000. v) Incometax providedduring the yearRs 33,000. vi) Loss of sale of

machineryRs 200 was writtenoff to general reserve. You are required to prepare a cashflow statement. (10Marks)

a. Explaindoubleentry systemof bookkeeping. (03Marks)

b. Prepare a trialbalancefrom the followingitems: (07Marks)

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c. Discussthe variousmethodsof inventoryvaluation. (10Marks)

a. What do youmeanby director's report? (03Marks)b. Define a preferenceshare.Explainthe typesof preferenceshares. (07Marks)c. Fromthe followingtrial balanceofSri.Kantesh,prepareProfit Loss Alc andBalanceSheetfor

the year ended31SI Dec 2008.Trial Balance as on 31 sl December 2008.

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Liabilities 2006 (Rs) 2007 (Rs) Assets 2006 (Rs) 2007 (Rs)

Share Capital 2,00,000 2,50,000 Land Buildings 2,00,000 1,90,000General Reserve 50,000 60,000 Machinery 1,50,000 1,69,000Profit LossAlc 30,500 30,600 Stock 1,00,000 74,000Bank Loan

[long70,000 -

SundryDebtors80,000 64,200

term]

Sundry Creditors 1,50,000 1,35,200 Cash 500 600

Provision for taxation 30,000 35,000 Bank - 8,000Goodwill - 5,000

5,30,500 5,10,800 5,30,500 5,10,800

Purchases 60,000ReserveFund 20,000Sales 1,00,000ReturnOutwards 1,000ReturnInwards 2,000

OpeninJ1;stock 30,000Closingstock 40,000

Expenses 20,000Bankbalances 5,000

OutstandinJ1;expenses 2,000Assets 50,000Creditors 30,000Debtors 80,000Capital 94,000

Debit Rs Credit Rs

Capital 15,000

Drawing 3,250Stock 17,445SalesReturns 554

Purchase Returns 840

Carriage Inwards 1,240

Deposit with Nayak 1,375

Rent Outstanding 130

Carriage outwards 725

Loan to Shah (a25 given on 1.1.2008 1,000

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Adjustments:i) The managerof Sri Kantesh is entitled to a commissionof 10 of the net profits calculated

afterchargingsuch commission.ii) Increase bad debts by 600 Rs. Reserve for doubtful debts is to be 10 and reserve fordiscounton debtors 5 .

iii) Stock valued at Rs 1500was destroyed by fire on 25.12.2008, but the insurance companyadmitteda claim for Rs 950onlyandpaid in 2009.

iv) Rs 200outofadvertisementexpensesis to be carriedforward to the nextyear. (10Marks)

The comparativeBalance Sheets and Profit and Loss statement for Aditya GrainsMerchants aregivenbelow:

cAdityaGrainsMerchantstive Balance SheetsDecember31

SummarizedProfit Loss Statements

Sales

Cost of goods sold

Gross profitExoenses

I Net profit

i) Calculate various ratios.

ii) Comment on the performance and indicate areas which require investigation.

2005 (Rs)

4,28,2532,58,7031,69,550

1,47,802

21,748

(20Marks)*****

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Interest on loan to Shah received 25Rent 820

Purchases 12,970Debtors 4,000Advertisement 954Bad debts 400Creditors 3,000Patents 500

Discount allowed 330

Wages 754

Reserves forDoubtful debts 1,200Sales 27,914Cash 62

Goodwill 1,730

48, I09 48,109

- - - - -

2007 (Rs) 2006 (Rs) 2005 (Rs)

Liabilities CapitalBank borrowing 12,300 8,610 2,460Creditors 1,03,006 64,427 63,622

Outstanding expenses 5,843 3,797 1,921Total current liabilities 1,21,149 76,834 68,003

Owner's capital 2,28,220 2,14,019 2,14,339Total 3,49,369 2,90,853 2,82,342

AssetsCash 54,485 16,218 29,179Debtors 33,638 60,495 54,364Stock 1,20,725 90,526 83,454

Expenses paid in advance 4,311 2,269 1,299

Total Current Assets 2,13,159 1,69,508 1,68,296Buildings, Furnitureetc net 1,36,210 1,21,345 1,14,046

Total 3,49,369 2,90,853 2,82,342