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Free of Cost ISBN : 978-93-5034-614-3
SolvedScanner AppendixCS Executive Programme Module - I
(Solution upto Dec. - 2012 and Question of June - 2013 Included)
Paper - 2 : Company Accounts, Cost and Management Accounting
Paper - 2A : Company Accounts
Chapter - 2 : Accounting for Share Capital
2012 - Dec [2] (a)
Amt in` Amt in`
(i) Bank Dr.
Profit & Loss a/c Dr.
To Investment
(Sale of Investment & Loss of ` 5,000/-)
40,000
5,000
45,000
(ii) Equity share capital a/c Dr.
To Calls in A rrears a/c
To Equity Share Forfeited a/c
(Forfeiture of 150 equity Shares for non-
payment of Calls-in-arrears)
1,200
300
900
(iii) Bank
To 14% Debentures a/c
To Securities Premium a/c
(Issue of 500, 14% debentures of ` 100 each at
a premium of 5%)
52,500
50,000
2,500
(iv) (a) Bank Dr.
To Calls in Arrear
(calls in arrears received from holders of 200,
11% preference shares)
4,000
4,000
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(b) 11% Preference Share Capita l a/c Dr.
To Calls in A rrears a/c
To 11% Preference Share Forfeited a/c
(Forfeiture of 50, 11% Preference Shares for
non-payment of Cal ls-in-arrears)
5,000
1,000
4,000
(v) (a) Bank Dr.
11% Preference Share Forfeited a/c Dr.
To 11% Preference Share Capital a/c
(Re-issue of forfeited preference shares @ 50
per shares)
2,500
2,500
5,000
(v) (b) Bank Dr.
To Equity Share Capital
To Securities Premium a/c
(Re-issue of Forfeited Preference Shares @ 50
per shares)
1,800
1,200
600
(vi) 11% Preferen ce S hare Forfeited a/c Dr.
Equity Share Forfeited a/c Dr.
To Capital Reserve a/c
(Balances of share forfeited a/c transferred to
capital reserve a/c)
2,500
900
3,400
(vii) General Reserve a/c Dr.
Profit and Loss a/c Dr.
To Capital Redemption Reserve a/c
(Redemption of preference share out of free
reserve)
50,000
50,000
1,00,000
(viii) 11% Preference Share Capital a/c Dr.
To Bank
(Amount due on redemption paid to preference
shareholders)
1,00,000
1,00,000
Chapter - 3 : Issue and Redemption of Debentures
2012 - Dec [3] (b)
(i) Bank Dr. 73,500
Loss on issue of debentures Account Dr. 7,000
To 12% debentures Account 70,000
To premium on issue of debentures account 3,500To premium on redemption of debentures account 7,000
(Issue of ` 70,000, 12% debenture of ` 100
each at a premium of 5% and redeemable
at a premium of 10%)
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(ii) Fortune Limited
Balance Sheet
I. Equities and Liabilities
Reserve and Surplus Amount in`
Securities premium 3,500
Less:Loss on issue of debentures (7,000) (3500)
Non- Current Liabilities
12% debenture 70,000
Debenture redemption premium 7,000
Total 73,500
ASSETS
Current Assets
Balance with Bank 73,500
TOTAL 73,500
2012 - Dec [4] (c)
Cum interest: The price quoted includes the interest for the expired period.
Ex-interest: The price does not include the interest for the expired period.
Chapter - 4 : Underwriting of Issues and Acquisition of Business
2012 - Dec [2] (b)
Statement of Underwriters liability
(Firm underwriting shares are treated as marked)
Particulars Liability of underwriters
X Y Z Total
Gross Liability 30,000 15,000 5,000 50,000
Less : Marked Applications 21,000 12,000 5,000 38,000
Balance 9,000 3,000 Nil 12,000
Less : Unmarked application in the
ratio of gross liability 4,200 2,100 700 7,000
Balance 4,800 900 (700) 5,000
Particulars Liability of underwriters
X Y Z Total
Credit of Z in ration of Gross Liability (467) (233) 700
Underwriters liability 4,333 667 0 5,000
Add : Firm Applications 5,000 2,000 1,000 8,000
Total liability 9,333 2,667 1,000 13,000
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Total Application 45,000
Less : Marked Application 30,000
Firm Underwriting 8,000 38,000
Unmarked Application 7,000
Journal Entries Amt in`
(i) X Dr. 5,59,980
Y Dr. 1,60,020
Z Dr. 60,000
To Share Capital 6,50,000To Securities Premium 1,30,000
(Shares allotted to underwriters in
ratio of their liability)
(ii) Underwriting Commission
Account Dr. 1,25,000
To X 75,000
To Y 37,500
To Z 12,500
(Underwriting commission due to
underwriters. Rate assumed as5% of face value of shares)
(iii) Bank Account Dr. 6,55,000
To X 4,84,980
To Y 1,22,520
To Z 47,500
(Balance payment received from
underwriters)
Entries for commission that underwriting commission is 5% of the value at which
shares are issued and premium is considered in calculation of underwriting
commission, then journal entry would be:(iv) Underwr i ting Commiss ion
Account Dr. 1,50,000
To X 90,000
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(ii) Underwriting Commission
Account
Dr. 1,25,000
To X 75,000
To Y 37,500
To Z 12,500
(Underwriting commission due to
underwriters. Rate assumed as
5% of face value of shares)
(iii) Bank Account Dr. 6,55,000
To X 5,05,020
To Y 1,02,480To Z 47,500
(Balance payment received from
underwriters)
Chapter - 5 : Final Accounts of Joint Stock Companies
2012 - Dec [4] (b)
Please refer 2001- Dec [2] (a) on page no. 177
Chapter - 6 : Consolidation of Accounts
2012 - Dec [3] (a)
Working notes:
1. Minority interest = 20% (as 80% Shares held by H Ltd.)
Pre acquisition period i.e. from 1st April, 2011 to 30 th September, 2011 = 6 MonthsPost acquisition period i.e. from 1st October, 2011 to 31st March, 2012 = 6 Months
Unsold goods in H limited which was purchased from S Ltd. = ` = `5,000
Unrealized profit = ` 5,000* 25/125 = ` 1,000
2. Distribution of Capital Profit
General & reserve = ` 80,000
Profit & Loss (1 - 4 - 2011) = ` 30,000
Pre acquisition profit in current year profit
(` 60,000 - ` 30,000) = ` 15,000
Total = ` 1,25,000
Share of H Limited (80%) = ` 1,25,000 = ` 1,00,000
Share of Minority shareholders = ` 1,25,000 = ` 25,000
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3. Cost of control/capital reserve
Amount paid for 80% share = ` 3,40,000
Less:Paid up value of shares held by H Ltd. = ` 1,60,000
Shares in Capital Profit = ` 1,00,000
Goodwill = ` 80,000
4. Share of H Ltd in revenue profit of S Ltd.
Profit from 01-4-2011 to 31st March, 2012 = ` 60,000 - ` 30,000
= ` 30,000
Profit from 01-10-2012 to 31st March, 2012 =` 30,000
= ` 15,000
Share of H Limited = ` 15,000
= ` 12,000
Share of Minority shareholders = ` 3,000 (` 15,000 - ` 12,000)
5. Minority Interest
Share capital 20% of ` 20,000 = ` 40,000
Share in capital profit = ` 25,000
Share in revenue profit = ` 3,000
Total = ` 68,000
Consolidated Balance Sheet of H Ltd. and its subsidiary S Ltd
as on 31st March, 2012
EQUITY AND LIABILITIESAmount in`
(1) Shareholders funds
(a) Share Capital;
60,000 Equity shares of ` 10 each 6,00,000
(b) Reserve and Surplus
a. General reserve 3,40,000
b. Profit and Loss A/c 1,00,000
Share in S Ltd.s revenue profit 12,000
1,12,000
Less:Unrealized profit 1,000 1,11,000
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(2) Current Liabilit ies
Trade payable
a. H Ltd. 70,000
b. S Ltd 35,000
1,05,000
Less:Mutual Owings 10,000 95,000
Minority Interest 68,000
TOTAL 12,14,000
ASSETS
1. Non-current assets
a. Fixed Asse tsTangible Assets:
Machinery
1. H Ltd. 3,90,000
2. S Ltd. 1,35,000 5,25,000
Furniture
3. H Ltd. 80,000
4. S Ltd. 40,000 1,20,000 6,45,000
Non-Tangible Assets:
Goodwill 80,000
2. Current assets
(a) Stock
i. H Ltd. 1,80,000ii. S Ltd. 1,20,000
3,00,000
Less:unrealized profit 1,000 2,99,000
(b) Trade receivables
i. H Ltd. 50,000
ii. S Ltd. 30,000
80,000
Less:Mutual Owings 10,000 70,000
(c) Balance with bank
i. H Ltd. 70,000
ii. S Ltd. 50,000 1,20,000
TOTAL 12,14,000
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Chapter - 7 : Valuation of Shares and Intangible Assets
2012 - Dec [4] (a)
(i) (A) Value of share as per net assets method
(B) Calculation of net assets `
Goodwill 1,00,000
Freehold property at market value 1,80,000
Plant and machinery 80,000
Stock 3,10,000
Trade receivables 2,13,000
Bank Balance 1,07,000
Cash in hand 1,700
9,91,700Less:Current Liabilities
Proposed divided 34,000
Trade payables 93,700
Income Tax payable 11,500
Provision for tax 82,500 2,21,700
Net Assets 7,70,000
Intrinsic value per share =
= `
= ` 25.67 Ans.
(C) Value of per share as per yield method:Average profit on weighted average basis
year Profit Weight Product
2010 1,38,000 1 1,38,000
2011 1,83,000 2 3,66,000
2012 1,97,000 3 5,91,000
6 10,95,000
Weighted average profit (Before tax) = `
= ` 1,82,500
Less:Income tax @ 50% = ` 91,250
Profit after Tax (PAT) = ` 91,250
Less:transfer to general reserve @ 20% = ` 18,250
Expected profit available for equity Share holders = ` 73,000
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Calculation of expected dividend yield
Expected Yield Rate =
=
= ` 24.33
Calculation of Yield Value per Share
Value Per Shares = Paid up value per share
= ` 10
= ` 16.22 ans.
(ii) Fair value Per Share =
= `
= ` 20.95
Chapter - 8 : Objective Questions
2012 - Dec [1] {C} (a)
(a) (i) This Statement is false: When a company which has already issued shares
wants to raise capital through the further issue of shares. it is under a legal
obligation to first offer the fresh shares to its existing shareholders unless, the
company has resolved otherwise by a special resolutions. So right share arenot issued to promoter for their services.
(ii) This Statement is false: Both underwriting commission i.e. brokerage can be
paid to an individual as underwriting commission is paid to an underwriter in
addition to brokerage for taking the responsibility to get ful l subscription to the
shares and debentures of the company.
(iii) This Statements is True: The company shall create debentures Redemption
Reserve equivalent to at-least 50% of the amount of debentures before
starting the redemption of debentures.
(iv) This Statement is false: Preliminary expenses is an example of fictitious
asset and not of an intangible assets
(v) This Statement is false: interim Dividend thus paid is an appropriation of
profit and not a charge against the profit.
(b) (i) (c) 7 years.
(ii) (c) The amount received on forfeited shares,
(iii) (a) Compulsory,
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( iv) (a) Issue of fresh equity shares
(v) (b) Capital reserve.
(c) (i) Managerial remuneration
(ii) For consideration other than cash.
(iii) Impairment of assets
(iv) International Accounting Standards Board.
(v) Non current assets.
Paper - 2B : Cost and Management Accounts
Chapter - 1 : Introduction to Cost and Management Accounting
2012 - Dec [8] (c)Please refer 2005 - June [7 ] (a) on page no. 421
Chapter - 2 : Material Cost
2012 - Dec [7] (b)
(b)(i) Optimum bearing batch size=
Annual Production = 24,000 bearings
Cost per Production per set up = ` 324
Inventory holding cost per unit per annum = 10 12 = ` 1.20 per unit p.a.
Optimum run size =
= 3600 unit
(ii) Calculation of inventory set up cost and holding cost at two different run size
Run Size 6000 units
Amount in`
3600 units
Amount in`
Annual set up costs 1,296
Annual set up costs 2,160
Annual inventory holding cost 3,600
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Annual inventory holding cost 2,160
4,896 4,320
Extra cost incurred by company on using run size of 6000 per bearing
= ` 4896 - 4320
= ` 576
(iii) Minimum Inventory Holding Cost: ` 2,160 i.e., carrying cost of EOQ.
Chapter - 5 : Method of Costing
2012 - Dec [7] (a)
Answer:
(i) S V Construction Ltd.
Contract Account
For the year ended 30th September, 2012
Particulars ` Particulars `
To Material 3,36,000 By work in Progress
To Wages paid: 3,40,000 Work Certified 7,50,000
Add: Accrued 2,800 3,42,800 Work Uncertified 14,000 7,64,000
To Direct Expenses paid 8,000 By Plant at site 48,000
Add: Accrued 1,200 9,200 By Materials at site 4,000
To Plant Purchased 60,000
To General Materials 32,000
To P&L Account 19,200To Work in Progress (Reserve) 16,800
8,16,000 8,16,000
Working Notes:
Calculation of work certified
Cash received is ` 6,00,000 representing 80% of the work certified, hence the
value of the work certified would be ` 7,50,000 (6,00,000 )
Calculation of Plant at site as on 30-09-2012
Value of Plant Purchased ` 60,000
Annual Depreciation ` 12,000 (Scrap value is given nil and working life
5 yrs)Value as on 30-09-2012 ` 48,000
(ii) Total profit made as on 30-09-2012 is ` 36,000. Since the contract value is ` 12
lakh and value of work certified is ` 7.5 lakhs which is more than of the contract
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price. So 2/3rd of profit made to date as reduced on cash basis shall been taken
to the P&L Account.
Profit to be taken to Profit and Loss Account
= Profit made upto date
= ` 19,200
Chapter - 6 : Budgetary Control
2012 - Dec [6] (b)
Please refer 2011 - Dec [7] (c) on page no. 500
Chapter - 7 : Marginal Costing
2012 - Dec [8] (b)
Since in the given question, machine hours availability is a limiting factor so the priorityof machine will depend on contribution per hour.
Calculation of contribution per machine hour
Particular Machine A () Machine B ()
Selling price per unit 9 9
Less:Marginal cost 5 6
Contribution per unit 4 3
Output per hour 100 units 150 units
Contribution per hour 400 450
Since per hour contribution is higher in case of machine B so machine B is to be used
for the production of Product-X
Chapter - 8 : Analysis & Interpretation of Financial Statements
2012 - Dec [6] (a)
1. Working Note No. 1
Current Ratio = 2
Working Capital = ` 4,00,000
Since Current Ratio =
2 =
2 Current Liabi li ties = Current Assets
As Working Capital = Current Assets - Current Liabilities
`4,00,000 = 2 Current Liabilities - Current Liabilities
` 4,00,000 = Current Liability
Current Assets = 2 Current Liabilities
= 2 ` 4,00,000
= ` 8,00,000
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2. Working Note No. 2
Capital Block to Current Assets = 3.2
Capital Block = Share Capital + Debentures + Net Profit +
Reserves
Capital Block = Current Assets
= ` 8,00,000
= ` 12,00,000
Total Liabilities = Capital Block + Current Liabilities
= ` 12,00,000 + ` 4,00,000 = ` 16,00,000
Total Assets = Total Liabi lities =`
16,00,000Fixed Assets = Total Assets - Current Assets
= ` 16,00,000 - ` 8,00,000
= ` 8,00,000
Fixed Assets to turnover = 1:3
Hence, Sales = ` 8,00,000 3 = ` 24,00,000
3. Working Note No. 3
Stock Velocity = 2 months
Inventory Turnover ratio = 12/2
= 6
Gross Profit Ratio = 25% on Sales
Hence, Gross Profit = ` 24,00,000 25% = ` 6,00,000
Cost of Goods Sold = Sales - Gross Profit= ` 18,00,000
Average Stock =
= `
= ` 3,00,000
4. Working Note No. 4
Creditors Velocity = 2 months
Creditor Velocity in Months = Creditors
2 = Creditors
Since, opening stock is not given; cost of goods sold is taken as purchases and it
is also assumed that purchases made at credit only
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Creditors = `
= ` 3,00,000
5. Working Note No. 5
Ratio of cash sales to credit sales = 1:2
Total Sales = ` 24,00,000 (refer working note number 3)
So Credit Sales = ` 24,00,000
= ` 16,00,000
Debtors Velocity = 3 months
Debtors Velocity in months = Debtors
3 = Debtors
Debtor = ` 16,00,000
= ` 4,00,000
6. Working Note No. 6
Net profit is 10% of Turnover
Since sales are ` 24,00,000 net profit is ` 24,00,000 10% = ` 2,40,000
Reserve is 2 % of Turnover
Reserve = ` 24,00,000 2.5% = ` 60,000
7. Working Note No. 7
Capital Block = Share Capital + Debentures + Net Profit + Reserves
Or ` 12,00,000 = Share Capital + Debentures + ` 24,0000 + ` 60,000
Or Share Capital + Debentures = ` (12,00,000 - 2,40,000 - 60,000)
= ` 9,00,000
8. Working Note No. 8
Debentures/Share Capital Ratio = 1:2
Hence, Debentures = 9,00,000 1/3 = ` 3,00,000
Share Capital = 9,00,000 2/3 = ` 6,00,000
Balance Sheet of Moon Ltd.
I. EQUITIES AND LIABILITIES `
1. Shareholders Funds
(a) Share Capital 6,00,000
(b) Reserves and Surplus:
I. Reserves 60,000
II. P rofit & Loss Account 2,40,000
2. Non-Current Liabilities
Debentures 3,00,000
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3. Current Liabilit ies
Creditors 3,00,000
Others Liabilities 1,00,000
TOTAL 16,00,000
II. ASSETS `
1. Fixed Assets 8,00,000
2. Current Assets
Stock 3,00,000
Debtors 4,00,000
Cash & Bank Balance 1,00,000
(Balancing Figure)
TOTAL 16,00,000
Chapter - 9 : Cash Flow Statement
2012 - Dec [8] (a)
Working Note No. 1
Plant and Machinery Account
Particulars Amount
()
Particulars Amount
()
To Balance B/d
To Profit and Loss A/c Profit on
sale (` 35,000 - ` 20,000)
5,00,000
15,000
By Depreciation (@ 25% on
opening balance)
By Bank (Sale)
1,25,000
35,000
To Bank (Balancing figure)
(Purchase of machinery)
3,45,000 By Balance C/d 7,00,000
8,60,000 8,60,000
Working Note No.2
Provision for Taxation Account
Particulars Amount () Particulars Amount ()
To Bank A/c
(Tax payment during the current
year)
50,000 By Balance B/d
By Profit & Loss A/c
(Balancing figure)
70,000
80,000
To Balance C/d 1,00,000
1,50,000 1,50,000
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Working Note No. 3
Profit and loss A/c
Particulars Amount () Particulars Amount ()
To Depreciation A/c 1,25,000 By Balance B/d 60,000
To Provision for Taxation A/c 80,000 By Plant and Machinery A/c
(Profit on sale of machinery)
15,000
To Balance C/d 1,00,000 By Operating Profit 2,30,000
3,05,000 3,05,000
Cash Flow Statement of Great Limited
for the year ended 31st March, 2012
Particulars ` `
(i) Cash Flow from Operating Activities :
Net Profit before Extraordinary items and
appropriation of profit
2,30,000
adjustment for :
Transfer to General Reserve 50,000
Proposed dividend 2,00,000
Operating profits before working capital changes 4,80,000
Increase in Stock (-) (2,00,000)
Decrease in Debtors (+) 2,00,000
Decrease in creditors (-) (1,20,000)3,60,000
Income-tax paid (-) 50,000 3,10,000
(ii) Cash Flow from Investing Activities :
Purchase of Fixed Assets (3,45,000)
Expenses on Building (2,00,000)
Increase in investments (1,00,000)
Sale of old machine 35,000 (6,10,000)
(iii) Cash Flow from Financing Activities :
Income in Share Capital (presumed fresh capital) 2,00,000
Issue of Debentures 2,00,000Dividend paid (1,00,000) 3,00,000
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Particulars () ()
Net Increase in cash or cash equivalent (I+II+III) NIL
Cash and cash equivalents at the beginning of the financial
year
2,00,000
Cash and cash equivalents at the end of the financial year 2,00,000
Chapter - 10 : Objective Questions
2012 - Dec [5] {C} (a)
(a) (i) This Statement is True.
A statement of cash flow reports the inflows and outflows of cash and its
equivalents only of an organisation during a particular period. Hence it is
prepared on cash basis and not on accrual accounting concepts-
(ii) This Statement is True.
For the determination of cost volume-profit relationship, marginal cost, break
even point analysis, profit volume ratio and key factor are considered. Hence
cost volume profit relationship is more comprehensive term.
(iii) This Statement is False.
Long term budgets are the budgets which are prepared for periods longer than
a year. They are prepared for those activities, the trend in which is difficult to
fore see over longer periods.
(iv) This Statement is True.
Direct costs are not necessarily the same as variable cost direct costs
comprises of di rect material cost ,direct labour and direct expenses, variablecost is made up of direct materials, direct wages, direct expenses and variable
overheads.
(v) This Statement is False.
The ABC analysis is a selective inventory control which aims at concentrating
control mainly on cost basis.
(b) (i) (b) Transfer to costing profit and loss account,
(ii) (b) Attained,
(iii) (c) Absorption costing,
(iv) (c) 12%
(v) (c) Halsey premium plans
(c) (i) Overheads,
(ii) Technique(iii) Conventional Budgeting
(iv) Decreases
(v) LIFO
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Question Paper of December - 2013
Paper - 2A : Company Accounts
Chapter - 2 : Accounting for Share Capital
2013 - June [2] (c) Write a note on buy-back of shares. (4 marks)
2013 - June [3] (b) Shreya Ltd. had an issue of 1,000 12% redeemable preference
shares of ` 100 each, repayable at a premium of 10%. These shares are to be
redeemed now out of the accumulated reserves, which are more than the necessary
sum required for redemption. Show the necessary entries in the books of the company,
assuming that the premium on redemption of shares has to be written off against the
companys securities premium reserve account. (6 marks)
2013 - June [4] (a) A limited company issued a prospectus inviting applications for
30,000 shares of ` 10 each at a premium of ` 2 per share. The amount was payable as
follows:
`
On application 2
On allotment 5 (including premium)
On first call 3
On second and final call 2
Applications were received for 45,000 shares and allotment was made on pro-rata basis
to the applicants of 36,000 shares. Money overpaid on appl ications was employed on
account of sum due on al lotment.
Ramesh, to whom 600 shares were allotted, failed to pay the allotment money and on
his subsequent failure to pay the first call, his shares were forfeited. Mohan, the holderof 900 shares failed to pay the two calls and his shares were forfeited after the second
and final call.
Of the shares forfeited, 1,200 shares were sold to Krishna credited as fu lly paid for ` 9
per share, the whole of Rameshs share being included.
Show journal and cash book entries and prepare the balance sheet. (12 marks)
Chapter - 4 : Underwriting of Issues and Acquisition of Business
2013 - June [2] (b) KBC Ltd. issued 50,000 equity shares. The whole of the issue was
underwritten as follows:
Underwriter K : 40%
Underwriter B : 30%
Underwriter C : 30%
Applications for 40,000 shares were received in all, out of which applications for 10,000shares had the stamp of Underwriter - K; those for 5,000 shares that of Underwriter- B;
and those for 10,000 shares for Underwriter - C.
The remaining applications for 15,000 shares did not bear any stamp.
Determine the liability of the underwriters. (5 marks)
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2013 - June [4] (b) Explain the nature of profit or loss prior to incorporation. How is it
treated in the books of accounts? (3 marks)
Chapter - 6 : Consolidation of Accounts
2013 - June [3] (a) The following are the balance sheets of H Ltd. and its subsidiary
S Ltd. as on 31st March, 2012:
Equity and Liabilities H Ltd. S Ltd.
() ()
Shareholders funds:
Share capital
Shares of ` 100 each fully paid 5,00,000 2,00,000
Reserves and surplus:
General reserve 1,00,000
Profit and loss account 80,000 () 1,00,000
Non-current liabilities:
6% Debentures 1,00,000
Current liabilities:
Trade payables 75,000 45,000
7,55,000 2,45,000
Assets
Non-current assets:
Fixed assets 3,50,000 1,50,000
Non-current investments:
6% Debentures in S Ltd. (acquired at cost) 60,000
1,500 Shares in S Ltd. at ` 80 each 1,20,000
Current assets:
Inventories 90,000 40,000
Trade receivables 60,000 30,000
Cash 75,000 25,000
7,55,000 2,45,000
H Ltd. acquired the shares on 1st August, 2011. The profit and loss account of S Ltd.
showed a debit balance of ` 1,50,000 on 1st April, 2011. During June, 2011 goods of S
Ltd. costing ` 6,000 were destroyed by fire against which insurer paid only ` 2,000.
Trade payables of S Ltd. include ` 20,000 for goods supplied by H Ltd. on which H Ltd.
made a profit of ` 2,000. Half of the goods were still in stock on 31st March, 2012.
Prepare a consolidated balance sheet and show the complete working. (9 marks)
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Chapter - 7 : Valuation of Shares and Intangible Assets
2013 - June [2] (a) Calculate the value of one equity share from the following
information:
(i) 60,000 equity shares of ` 10 each, ` 7 paid-up.
(ii) ` 2,00,000, 10% preference shares of ` 100 each, fully paid-up.
(iii) Expected annual profits before tax ` 4,00,000.
(iv) Tax rate 35%.
(v) Transfer to general reserve 20% of profits every year.
(vi) Normal rate of return 20%. (6 marks)
Chapter - 8 : Objective Questions
2013 - June [1] {C} (a) State, with reasons in brief, whether the following statements
are true or false:(i) The existing equity shareholders are necessarily to accept the rights offer. (2)
(ii) Contingent liability in respect of a transaction between holding and wholly owned
subsidiary companies will not appear in the footnote of the consolidated balance
sheet. (6)
(iii) In case of inter-company unrealised profits included in unsold goods, minority
shareholders are not affected in any way. (6)
(iv) In case of inadequacy of profits, dividend can be paid out of capital reserve.
(5)
(v) Redemption of preference shares amounts to reduction in the capital of the
company. (2)
(2 marks each)
(b) Write the most appropriate answer from the given options in respect of the following:(i) Discount allowed on the re-issue of forfeited shares cannot exceed
(a) 10% of paid-up capital
(b) 10% of the capital re-issued
(c) The amount received on forfeited shares
(d) Capital reserve account. (2)
(ii) Sections 349 and 350 of the Companies Act, 1956 contain the provisions relating
to the manner of determination of net profit for the purpose of calculating the
(a) Disposal of net profit
(b) Managerial remuneration
(c) Fair value of assets
(d) Fair value of shares. (5)
(iii) As per Accounting Standard-28, an impairment loss should be recognisedwhenever the recoverable amount of an asset is less than its
(a) Original cost
(b) Opportunity cost
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(c) Carrying amount
(d) None of the above. (1)
(iv) When a company issues debentures at par or at a discount which are
redeemable at a premium, the premium payable on redemption of the
debentures is to be treated as
(a) Revenue loss
(b) Capital loss
(c) Deferred revenue expenditure
(d) None of the above. (3)
(v) Expenses incidental to the creation and floatation of a company are called
(a) Underwriting expenses
(b) Preliminary expenses(c) Trade expenses
(d) Establishment expenses. (4)
(1 mark each)
(c) Re-write the following sentences after filling-in the blank spaces with appropriate
word(s)/figure(s):
(i) Section 81 of the Companies Act, 1956, provides that where a public company
proposes to increase its subscribed capital at any time after the expiry of
__________year(s) of its formation or at any time after the expiry of __________
year(s) from the first allotment of shares whichever is earlier, it should satisfy
certain conditions. (2)
(ii) Preliminary expenses being of capital nature may be written-off against_______.
(4)(iii) Goodwill is an intangible asset, but is not a ________asset. (7)
(iv) Accumulated losses of the subsidiary company upto the date of acquisition of
shares by the holding company are called _________ losses. (6)
(v) International Accounting Standards are issued by the ________. (1)
(1 mark each)
Paper - 2B : Cost and Management Accounts
Chapter - 5 : Method of Costing
2013 - June [7] (b) Distinguish between production account and cost sheet.
(3 marks)
Chapter - 6 : Budgetary Control
2013 - June [8] (a) The following data are available in a manufacturing company for a
year period :
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(` in lakhs)
Fixed expenses :
Wages and salaries 9.50
Rent, rates and taxes 6.60
Depreciation 7.40
Sundry administrative expenses 6.50
Semi-variable expenses (at 50% capacity):
Maintenance and repairs 3.50
Indirect labour 7.90
Sales department salaries, etc. 3.80
Sundry administrative expenses 2.80
Variable expenses (at 50% of capacity)Materials 21.70
Labour 20.40
Other expenses 7.90
98.00
Assume that fixed expenses remain constant for all levels of production, semi-variable
expenses remain constant between 45% and 65% of capacity and increasing by 10%
between 65% and 80% capacity and by 20% between 80% and 100% capaci ty.
Sales at various levels are ! at 50% capacity : ` 100 lakh; at 60% capacity : ` 120 Lakh;
at 75% capacity : ` 150 lakh; at 90% capacity : ` 180 lakh; and at 100% capacity : ` 200
Lakh.
Prepare a flexible budget for the year and forecast the profits at 60%, 75%, 90% and
100% of capacity. (9 marks)Chapter - 7 Marginal Costing
2013 - June [6] (b) Marginal costing rewards sales whereas absorption costing rewards
production. Comment. (3 marks)
2013 - June [8] (b) A company has fixed expenses of ` 90,000 with sales of ` 3,00,000
and a profit of ` 60,000 during the first half year. If in the next half year, the company
suffered a loss of ` 30,000.
Calculate !
(i) P/V ratio, break-even point and margin of safety for the first half year.
(ii) Expected sales volume for next half year assuming that selling price and fixed
expenses remain unchanged.
(i ii ) The break-even point and margin of safety for the whole year. (6 marks)
Chapter - 8 : Analysis & Interpretation of Financial Statements2013 - June [6] (a) From the following particulars relating to Genius Ltd., prepare
balance sheet as on 31st March, 2013:
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Investment in shares 100 120
Preliminary expenses 15 5
Current assets:
Inventories 440 422
Trade receivables 160 134
Prepaid expenses 4 5
Cash in hand 1 2
2,217 2,474
Additional in formation:
(i) Depreciation on freehold building @ 2 % on cost ` 12,00,000; on machinery
and plant @ 10% on cost ` 5,00,000; on furniture and fitting @ 5% on cost
`10,000.
(ii) Dividend received ` 6,000 was used in writing down the book value of
investment in shares.
(iii) Goodwill was written off out of general reserve.
(iv) The proposed dividend for the year ended 31st March, 2012 was paid off and
interim dividend of ` 60,000 was paid out of profit and loss account.
(12 marks)
Chapter - 10 : Objective Questions
2013 - June [5] {C} (a) State, with reasons in brie f, whether the following statement are
true or false:
(i) Cost sheet is the same as statement of cost and profit. (5)
(ii) Zero base budgeting is based on incremental approach. (6)
(iii) When a factory operates at full capacity, fixed cost also becomes relevant formake or buy decisions. (7)
(iv) Marginal costing is different from direct costing. (7)
(v) Management accounting is based on double entry system. (1)
(2 marks each)
(b) Write the most appropriate answer from the given options in respect of the
following:
(i) The rate of change of labour force in an organisation during a specified period
is called
(a) Labour efficiency
(b) Labour turnover
(c) Labour productivity
(d) None of the above. (3)(ii) Differential cost analysis is incorporated in the
(a) Cost books
(b) Financial books
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(c) Statutory books
(d) None of the above. (1)
(iii) Marginal costing is a very useful technique to management for
(a) Cost control
(b) Profit planning
(c) Decision making
(d) All of the above. (7)
(iv) When prices of materials have a rising trend, then the suitable method for
issuing the materials will be
(a) FIFO
(b) LIFO
(c) HIFO(d) Standard cost price. (2)
(v) Cash flow statement is required for the financial planning of
(a) Short range
(b) Long range
(c) Medium range
(d) Very long range. (9)
(1 mark each)
(c) Re-write the following sentences after filling-in the blank spaces with appropriate
word(s)/figure(s):
(i) A document which provides for assembly of different costs in respect of a cost
centre or a cost unit is called _______. (5)
( ii ) Economic order quant ity depends on _______ and _______ costs. (2)(iii) In case the amount of overheads recovered from production is more than the
actual overheads, there is said to be _______ of overheads. (4)
(iv) Abnormal idle time cost should be charged to _______. (3)
(v) Bin card shows _______ at any moment of time. (2)
(1 mark each)
Shuchita Prakashan (P) Ltd.25/19, L.I.C. Colony, Tagore Town,
Allahabad - 211002Visit us : www.shuchita.com