OMTEX CLASSES “The home of text” Accounts Preliminary Examination 2007 - 08
Total Marks 100
OMTEX - CLASSES
Preliminary Examination –
004
ACCOUNTS Time – 3 hrs.
4 PAGES
Max. Marks : 100
Q1. Attempt any four of the following. A. Answer in one sentence each. 1. 2. 3. 4. 5.
What is dishonour of bill? What is the fixed instalment method of depreciation? What does a credit balance on the Joint Venture Account show? What is an average profit? What do you mean by statement of Affairs?
B. Write the word/term/phrase which can substitute each of the following statement: 1. 2. 3. 4. 5.
A partnership for specific purpose and for temporary period. List of debit and credit balances of the ledger accounts. A person who accepts the bill. Written agreement among the partners. The balance which cannot be recovered from the debtors.
C. Match the following pairs. 1. 2. 3. 4. 5.
Group A Co - Venturer Rebate Credit balance of Income & Expenditure Account Dormant Partner Trading Account
a. b. c. d. e. f. g. h.
Group B Limited liability Surplus Temporary partner Retirement of a bill Deficit Does not take active part in the business Account showing the net profit / net loss Power and Fuel / Gross profit.
D. Select the most appropriate alternative from hose given below each statement. 1.
2.
3.
The interest on capital of a partner is _______ to profit & loss account. a. Credited b. Added c. Debited d. Divided If fixed capital method is adopted, Net profit is transferred to _______ account of the partner. a. Current b. Capital c. Balance sheet d. Trading Not for profit organisation prepares _________ to find out its financial position. a. Balance sheet b. Receipts & payments accounts. c. Trading account
4.
5.
d. Income & Expenditure account. Wages paid for Installation of Machinery should be debited to the ____________ account. a. Installation b. Wages c. Salaries d. Machinery. There are ___________Parties to a bill of exchange. a. Four b. Three c. Two d. One.
E. State with reason whether the following statements are true of false. 1. Partnership is a non – trading concern. 2. A bill of exchange is a negotiable instruments.
F. On 10-Feb-1999, Thomas Kuruvilla, Mira Road, Draws a 3 months bill for Rs. 9000 on Poonam Ghadi,
B.M.C. Road, Mahim. Poonam Ghadi, accepts the bill on 15th March, 1999. Draft a bill of exchange. Q2. Saishree Ltd. Purchased a Machine worth Rs. 1,00,000 on 1st April, 2000. On 1st April 2001, the company purchased additional machine for Rs. 20,000. On 1st Oct 2002, the company sold the machine purchased on 1st April, 2001 for Rs. 16,000. Company writes off depreciation at the rate of 10% p.a. on reducing balance system. The Accounts being closed on 31st March every year. Show Machinery account and Depreciation account for 3 years. i.e. 2000 – 01, 20010 – 02 & 2002 – 03. (10marks) OR A. Surekha and Sunita carrying on a business in partnership for last 10 years. Goodwill of the firm is to be valued at 2 ½ years purchase of the average profit of lat six years. Profits of last six years are 2002 Rs. 2,95,000 (profit) 2001 Rs. 2,00,000 (profit) 2000 Rs. 1,60,000 (profit) 1999 Rs. 1,00,000 (loss) 1998 Rs. 1,10,000 (profit) 1997 Rs. 97,000 (profit) You are required to calculate the value of goodwill of the firm. (5 marks)
B. Explain the important of the computer in the Modern Age. (5 marks) Q3. On 1st January 2007, Archana draws a 3 months bill on Rachana for Rs. 20,000. Rachana accept it and returns it to Archana. Archana discounted the bill with her banker at a Discount of 10% p.a. Before the due date, Rachana finds herself unable to make the payment of the bill and hence requests Archana to renew the bill. Archana accepts the proposal on the condition that Rachana should pay Rs. 8,000 in cash and accepts a new bill for 3 months along with interest @ 12% p.a. on the balance. These arrangements were carried through. But afterwards Rachana became insolvent and only 50% (Half) of the amount could be recovered from her estate. (12 marks) Pass necessary Journal entries in the books of Archana. OR Q3. Journalise the following transactions in the book of Sanjay. A. Jay informs Sanjay that Chavan acceptance for Rs. 18000 endorsed to Jay has been dishonoured. Noting charges amounted to Rs. 600. B. Deepika padkon renews her acceptance to Sanjay for Rs. 25,000 by paying Rs 17,000 in Cash and accepting a fresh bill for the balance plus interest at 10% p.a. for 3 months. C. Nilesh retired his acceptance to Sanjay for Rs. 16000 by paying Rs. 15800 in cash. D. Sanjay sent a bill of Rakesh for Rs. 22,000 to Bank for collection. But bank informed that the bill has been dishonoured by Rakesh. (12 marks) Q4. Neenakshi and Bhavika undertook the construction of a building of Sports Club for an agreed price for Rs. 25,00,000. Neenakshi brought in Rs. 17,50,000 & Bhavika brought Rs. 15,00,000 into the joint venture. These amounts were deposited in a Joint Bank account.
The following expenses were then incurred and paid from the Joint Bank account. Purchase of materials Rs. 10,00,000. Payment of wages Rs. 4,50,000 & Purchase of plant Rs. 5,00,000. The Sports Building was fully constructed in time, but due to certain defects in the construction the price was received 10% below the agreed price. Half of the plant was taken over by Bhavika at 20% below cost while other half was sold for Rs. 2,60,000. Unused materials were taken over by Neenakshi for Rs. 2,000. Prepare_ 1. Joint venture Account. 2. Co – Venturers Account. 3. Joint Bank account. (12 marks) Q5. Mr. Soham Marvadi, a general trader keeps his books of accounts on single entry system. From the records the information is available. (10 marks) Particulars 1-4-2005 31-3-2006 Plant and Machinery 100000 150000 Furniture 60000 60000 Stock in trade 46000 44000 12% Investment 20000 45000 Sundry Debtors 12500 20000 Bills Payable 8500 9000 Sundry Creditors 10000 17500 Bills Receivable 23000 30000 Cash at Bank 24000 46000 Further information. 1. His withdrawals during the year were Rs. 10000. He had also taken goods worth Rs. 17500 for his personal use. 2. He had sold his private furniture for Rs. 32,000 and proceeds were invested into the business. 3. Plant & Machinery are to be depreciated @ 10% p.a. and furniture is to be depreciated @ 15%. 4. Reserve for Bad & Doubtful debts is to be provided @ 5% on debtors. 5. Additions to Plant & Machinery and Investment were made on 1st October 2005 & 1st January, 2006 respectively. Prepare opening and closing statement of affairs and Profit or loss statement for the year ended 31-3-2006. Q6. From the showing Receipts & Payments account for the year ended 31-3-2006. You are required to prepare an Income and Expenditure account for the year ended 31st March, 2006 & Balance sheet as on that date. (16 marks) Receipts and payments Account for the year ended 31st March, 2006 Receipts Amount Payments Amount To Balance b/d 4160 By Salaries 5500 To Subscriptions By Entertainment 2500 2005 – 06 16000 Expenses 1080 2006 – 07 412 By Lighting 1536 To Donation 5000 By General Expenses 500 To Receipts From Entertainment 3644 By Taxes 12000 To Interest 324 By Investments 2400 To Entrance Fees 4500 By Expenses of 2004 – 06 944 By Printing & Stationery 4000 By Fixed Deposit 3580 By Balance C/d 34040 34040 Adjustments 1. There are 450 members paying an annual subscription of Rs. 40 each. 2. The salaries outstanding on 31 – 3 – 2006 was Rs. 1000 3. Land and Building stood in the book at Rs. 60,000 and Furniture at Rs. 4,600 on 1st April 2005 write off depreciation at 2% on land and building and at 10% on furniture. Capital fund as on 1st April 2005 was Rs. 66,360. 4. Interest on Investments @ 5% p.a. has accrued for 3 months. 5. 50% of the entrance fees is to be capitalized. Q7. Govindan & Mukul are partner sharing profits and loses in the ratio 3:2. Following is the trial balance as on 31st Match 2006. (20 marks)
Trial Balance as on 31 – 3 – 2006 PARTICULARS Capital Mr. Govindan Mr. Mukul Stock on 1st April 2005 Machinery Bills Receivable & Payable Purchase & Sales Furniture Returns Current Account Mr. Govindan Mr. Mukul Customers Account Supplies Account Salaries (11 months) Productive Wages Office Insurance General Expenses Commission 10% Bank Loan Interest on Loan Bad debts Advertisement R.D.D. Land & Building
DR.
CR. 50000 50000
20000 70000 10000 100000 6000 2000
8000 12000 5000
2000 1000 30000 40000 11000 10000 3000 2000 3000 10000 400 1000 8000 1000 10600 287000
287000 Adjustments: 1. Closing stock is valued at market price Rs. 55000 which is 10% above cost. 2. Machinery includes Rs. 10000 purchased on 31st March 2006. 3. Depreciate Machinery @ 10% p.a. 4. Provide R.D.D. Rs. 2,000 on debtors & provide 2% for reserve for discount on debtors. 5. Mr. Govindan is entitled to a salary of Rs. 400 p.m. from 1st August 2005. 6. Provide 10% for reserve for discount on creditors. 7. Mr. Mukul is entitled to get 2% commission on gross profit. Prepare Trading Account and Profit or loss account for the year ended 31st March 2006 and Balance sheet as on that date.
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