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Financial Accounting Solved Question Papers: November' 2013


2013 (November) - Semester
Full Marks: 80
Pass Marks: 32
1. (a) Write True or False: 1x3=3
(i) Loss of stock by fire is shown on the credit side of Profit and Loss account. False
(ii) Hire-purchase transactions are governed by the Hire Purchase Act, 1972. True
(iii) When firms are amalgamated, Realisation accounts are prepared to close the books of such firms. True
(b) Fill in the blanks: 1x3
(i) Royalty paid on sales debited to Profit and Loss Account.
(ii) A branch is simply a separate unit of a business enterprise.
(iii) When a partner is not able to meet his liabilities, he is said to be insolvent.
(c) Choose the correct answer: 1+1=2
(i) Accounting standard deals with depreciation is (5/6/7).
(ii) Under the stock and debtors system, Branch Stock Account is a (Personal Account/ Real Account/ Nominal Account).

2. Write brief short notes on (any four) 4x4=16

(a) Features of Accounting Principles
Ans: Essential features of Accounting Principles
  1. Man made: Accounting principles are manmade. They are not tested in a laboratory.
  2. Objectivity: It means accounting principles must be based on facts and free from personal bias or judgment of the individuals who prepares the statements.
  3. Usefulness/relevance: Accounting principles must be relevant and useful to the person who is using financial statements.
  4. Feasibility: The accounting principles should be practicable or feasible.
  5. Axiom: It denotes a statement of truth which cannot be questioned by anyone.
(b) Goods in Transit
Ans: Goods in transit: When goods are dispatched by the head office to branch and the branch does not receive it even upto the end of the year, it is known as goods in transit. In the same way when goods are returned by branch to head office and the head office does not receive it upto the end of the year it is also known as goods in transit.
It is quite understandable that a difference should arise in the balances of two accounts due to these transactions. Therefore, to reconcile, the following journal entry will be passed in head office books in both the circumstances:
Goods in Transit a/c Dr.
To Branch a/c
(Goods in transit taken into books)
In the Balance Sheet of Head office both the above items will be shown as an asset.
(c) Termination of Hire-Purchase agreement
Ans: The hire-purchase agreement stipulates the circumstances in which the agreement can be terminated. The agreement is generally terminated by return of the goods by the hirer, notice of termination by the owner on account of hirers breach of conditions or notice of termination by the hirer. The hirer may, at Dairy time before the final payment under the hire-purchase agreement falls due, and after giving the owner not less than fourteen days’ notice in writing of his intention so to do, terminate the hire-purchase agreement. Where a hire-purchase agreement is terminated under this Act, then the owner shall be entitled to retain the hire which has already been paid and to recover the arrears of’ hire due.
(d) Capital Expenditure
(e) Treatment of goodwill on dissolution of a partnership firm.

3.(a) Following is the trial balance of Jaipal and Rampal as on 31st March, 2013:
Debit
Amount
Credit
Amount
Stock on 1.4.2012
Bills receivable
Purchases
Return Inward
Plant and Machinery
Furniture
Sundry Debtors
Cash at Bank
Salaries
Wages
Rent and Taxes
Insurance
Printing & Stationery
General Expenses
Power and Fuel
Drawings:
Jaipal
Rampal
200000
25000
275000
5000
100000
50000
120000
76000
12000
19000
11500
3000
2000
6500
4500

20000
15000
Capital Accounts:
Jaipal
Rampal
Sales
Bills Payable
Return Outwards
Sundry Creditors

180000
150000
400000
20000
4500
190000

944500

944500
From the following additional information, you are required to prepare Trading and Profit & Loss Accounts and also Balance sheet of Jaipal and Rampal for the year ended on 31st March, 2013: 3+4+5=12
  1. Stock as on 31.03.2013 Rs. 150000
  2. A credit sale of Rs. 4000 has not been recorded in the books
  3. Uninsured stock worth Rs. 6000 has been destroyed by fire.
Solution:
Trading and Profit & Loss A/c
Particulars
Amount
Particulars
Amount
To Opening Stock
To Purchases            2,75,000
Less: Loss by fire           6,000
2,69,000
Less: Returns                4,500
To Wages
To Fuel & Power
To Gross Profit c/d
2,00,000



2,64,500
19,000
4,500
61,000
By Sales                       4,00,000
Add: Credit                       4,000
4,04,000
Add: sales omitted          5,000
By Closing Stock



3,99,000
1,50,000

5,49,000

5,49,000

To General Expenses
To Loss by fire
To Salaries
To Rent & Taxes
To Insurance
To Printing & Stationary
To Net Profit c/d

6,500
6,000
12,000
11,500
3,000
2,000
20,000

By Gross Profit b/d

61,000

61,000

61,000


Profit & Loss Appropriation A/c
Particulars
Amount (Dr)
Particulars
Amount (Cr)
To Share of Profit:
Jaipal    = 20,000 x 1/2
Rampal = 20,000 x 1/2


10,000
10,000
By Net Profit b/d
20,000

20,000

20,000
Partner’s Capital A/c
Particulars
Jaipal
Rampal
Particulars
Jaipal
Rampal
To Drawings
To Balance c/d
20,000
1,70,000
15,000
1,45,000
By Balance b/d
By P/L Appropriation A/c
1,80,000
10,000
1,50,000
10,000

1,90,000
1,60,000

1,90,000
1,60,000
Balance Sheet
Liabilities
Amount
Assets
Amount
Bills Payable
Sundry Creditors

Capital Accounts:
Jaipal      = 1,70,000
Rampal  = 1,45,000
20,000
1,90,000



3,15,000
Bills Receivable
Plant & Machinery
Furniture
Sundry Debtors                       1,20,000
Add: Credit sale omitted             4,000                   

Cash at Bank
Closing stock
25,000
1,00,000
50,000

1,24,000

76,000
1,50,000

5,25,000

5,25,000
Or
(b) What do you mean by “Accounting Standards”? Mention the procedure for issuing Accounting standards. Distinguish between Accounting Standard and Accounting Principles. 2+5+5=12
Ans: ACCOUNTING STANDARDS: Accounting Standards are the policy documents or written statements issued, from time to time, by an apex expert accounting body in relation to various aspects of measurement, treatment and disclosure of accounting transactions for ensuring uniformity in accounting practices and reporting. These standards are prepared by Accounting Standard Board (ASB). Accounting Standards are formulated with a view to harmonies different accounting policies and practices in use in a country.
Procedure adopted in formulation of Accounting Standards:
The Institute of Chartered Accountants of India (ICAI), recognising the need to harmonies the diverse accounting policies and practices, constituted an Accounting Standards Board (ASB) on April 21, 1977. The main function of ASB is to formulate accounting standards so that such standards may be mandated by the Council of ICAI. While formulating the standards in India, ASB will take into consideration the applicable laws, customs, usages and business environment.
Following procedure will be adopted for formulating Accounting Standards:
  1. Identification of the broad areas by the ASB for formulating the Accounting Standards.
  2. Constitution of the study groups by the ASB for preparing the preliminary drafts of the proposed Accounting Standards.
  3. Consideration of the preliminary draft prepared by the study group by the ASB and revision, if any, of the draft on the basis of deliberations at the ASB.
  4. Circulation of the draft, so revised, among the Council members of the ICAI and 12 specified outside bodies such as Standing Conference of Public Enterprises (SCOPE), Indian Banks’ Association, Confederation of Indian Industry (CII), Securities and Exchange Board of India (SEBI), Comptroller and Auditor General of India (C& AG), and Department of Company Affairs, for comments.
  5. Meeting with the representatives of specified outside bodies to ascertain their views on the draft of the proposed Accounting Standard.
  6. Finalisation of the Exposure Draft of the proposed Accounting Standard on the basis of comments received and discussion with the representatives of specified outside bodies.
  7. Issuance of the Exposure Draft inviting public comments.
  8. Consideration of the comments received on the Exposure Draft and finalisation of the draft Accounting Standard by the ASB for submission to the Council of the ICAI for its consideration and approval for issuance.
  9. Consideration of the draft Accounting Standard by the Council of the Institute, and if found necessary, modification of the draft in consultation with the ASB.
  10. The Accounting Standard, so finalised, is issued under the authority of the Council.
4. (a) What is “Hire-Purchase System? Mention its important features. Distinguish between hire-purchase system of sales and ordinary credit sales. 2+4+5=11
Ans: Hire Purchase - Meaning: A trader could sell goods either for cash or for credit. For goods sold on credit, the payments may be made by the buyer in lump sum on a future date, or in installments spread over for a specified period of time. When goods are sold on credit, for which payment is made by the buyer in installments over a period of time, it is called purchase system or installment system.
Hire Purchase System defers to the system wherein, the seller of goods transfer the goods to the buyer without transferring the ownership of goods. The payment for the goods will be made by the buyer in installments. If the buyer pays all the installments, the ownership of the goods will be transferred, on payment of the last installment. However, if the buyer does not pay for any installment, the goods will be repossessed by the seller and the money paid on earlier installments will be treated as hire charges for using the goods. So, under this system, the transaction may result in purchasing of goods by the buyer or in hiring the goods. Hence, the system is called Hire Purchase System.
Characteristics of Hire-Purchase System
The characteristics of hire-purchase system are as under
  1. Hire-purchase is a system of credit sale.
  2. The price under hire-purchase system is paid in installments.
  3. The goods are delivered in the possession of the purchaser at the time of commencement of the agreement.
  4. Hire vendor continues to be the owner of the goods till the payment of last installment.
  5. The hire-purchaser has a right to use the goods as a bailer.
  6. The hire-purchaser has a right to terminate the agreement at any time in the capacity of a hirer.
  7. The hire-purchaser becomes the owner of the goods after the payment of all installments as per the agreement.
  8. If there is a default in the payment of any installment, the hire vendor will take away the goods from the possession of the purchaser without refunding him any amount.
Difference between Sale and Hire Purchase
Although hire purchase system could ultimately result in sale of goods, the sale in normal sense and sale under hire purchase system are not the same. The following are the differences between sale and hire purchase.
Sale
Hire Purchase
A ‘sale’ is governed by the sale of Goods Act, 1930.
Hire purchase is governed by the Hire Purchase Act, 1972.
In case of sale, the ownership of the goods is transferred to the buyer immediately.
In case of Hire purchase, the ownership of goods is transferred to buyer on payment of all installments.
In case of sale, the buyer makes payment in lump sum.
In case of hire purchase, the payment is made in installments.
The buyer pays only for the price of goods.
The hire purchaser pays for the price of goods and also some amount of interest.
On non-payment of the consideration the seller cannot take back the goods, but can only take legal action on buyer.
On non-payment of any installment, the seller can re-possess the goods.
Once a sale has taken place, neither the seller, nor the buyer can terminate the contract (unless it is for genuine reason like damage of goods etc.)
Either the buyer or the seller can terminate the contract at any point of time, until the payments of last installment.
When the buyer becomes insolvent, the seller has to undertake the risk of loss.
When the hire purchaser becomes insolvent, the seller can reposes the goods, and hence need not undertake the risk of loss.
A sale is subject to levy of sales tax at the time of contract of sale.
In this case, the sales tax will be leviable at the time of ownership (i.e. on payment of last installment).

Or
(b) Delta Company purchases a motor car from Meghna motor company on the instalment system on 1.4.2010. the terms of payment were Rs. 120000 payable immediately on delivery and the balance by three annual instalments of Rs.120000 each on 31st March every year. The cash price of the motor car was Rs.450000.
The vendor charges interest @5% p.a.  on the yearly balances. Depreciation @10% p.a. was written off on the written down value system.
From the above particulars, prepare the following ledgers in the books of delta company for the period: 4+4+3=11
  1. Motor Car Account
  2. Meghna motor Company’s Account
  3. Interest Suspense Account
Solution:
Calculation of Interest:

Rs.
Cash Price (1.4.10)
Less: Down Payment
4,50,000
1,20,000

Add: Interest A/c (31.3.11)
3,30,000
16,500

Less: 1st Installment
3,46,500
1,20,000

Add: Interest A/c (31.3.12)
2,26,500
11,325

Less: 2nd Installment
2,37,825
1,20,000

Add: Interest A/c (31.3.13)
1,17,825
2,175

Less: 3rd Installment
1,20,000
1,20,000

NIL


Calculation of Depreciation:

Rs.
Cash Price (1.1.10)
Less: Depreciation @ 10% (31.3.11)
4,50,000
45,000
B.V. (1.4.11)
Less: Depreciation @ 10% (31.3.12)
4,05,000
40,500
B.V. (1.4.12)
Less: Depreciation @ 10% (31.3.13)
3,64,500
36,450

3,28,050
Journal Entries
In the books of Delta Company (Vendee)
Date
Particulars
L/F
Dr. Amount
Cr. Amount
1.4.10
Motor Car A/c                                                     Dr.
Interest Suspense A/c                                        Dr.
To Meghna Motor Co. A/c

4,50,000
30,000


4,80,000
1.4.10
Meghna Motor Co. A/c                                      Dr.
To Bank A/c

1,20,000

1,20,000
31.3.11
Interest A/c                                                          Dr.
To Interest Suspense A/c

16,500

16,500
31.3.11
Meghna Motor Co. A/c                                       Dr.
To Bank A/c

1,20,000

1,20,000
31.3.11
Depreciation A/c                                                 Dr.
To Motor Car A/c

45,000

45,000
31.3.11
Profit & Loss A/c                                                 Dr.
To Interest A/c
To Depreciation A/c

61,500

16,500
45,000
31.3.12
Interest A/c                                                          Dr.
To Interest Suspense A/c

11,325

11,325
31.3.12
Meghna Motor Co. A/c                                      Dr.
To Bank A/c

1,20,000

1,20,000
31.3.12
Depreciation A/c                                                 Dr.
To Motor Car A/c

40,500

40,500
31.3.12
Profit & Loss A/c                                                  Dr.
To Interest A/c
To Depreciation A/c

51,825

11,325
40,500
31.3.13
Interest A/c                                                           Dr.
To Interest Suspense A/c

2,175

2,175
31.3.13
Meghna Motor Co. A/c                                        Dr.
To Bank A/c

1,20,000

1,20,000
31.3.13
Depreciation A/c                                                   Dr.
To Motor Car A/c

36,450

36,450
31.3.13
Profit & Loss A/c                                                   Dr.
To Interest A/c
To Depreciation A/c

38,625

2,175
36,450
Ledger
In the books of Delta Company
Motor Car A/c
Dr. Cr.
Date
Particulars
Amount
Date
Particulars
Amount
1.4.10
To Meghna Motor Co.
4,50,000
31.3.11
31.3.11
By Depreciation A/c
By Balance c/d
45,000
4,05,000


4,50,000


4,50,000
1.4.11
To Balance b/d
4,05,000
31.3.12
31.3.12
By Depreciation A/c
By Balance c/d
40,500
3,64,500


4,05,000


4,05,000
1.4.12
To Balance b/d
3,64,500
31.3.13
31.3.13
By Depreciation A/c
By Balance c/d
36,450
3,28,050


3,64,500


3,64,500


Meghna Motor Co.
Dr. Cr.
Date
Particulars
Amount
Date
Particulars
Amount
1.4.10
31.3.11
31.3.11
To Bank A/c
To Bank A/c
To Balance c/d
1,20,000
1,20,000
2,40,000
1.4.10
31.3.11
By Motor Car A/c
By Interest A/c
4,50,000
30,000


4,80,000


4,80,000
31.3.12
31.3.12
To Bank A/c
To Balance c/d
1,20,000
1,20,000
1.4.11
By Balance b/d
2,40,000


2,40,000


2,40,000
31.3.13
To Bank A/c
1,20,000
1.4.12
By Balance b/d
1,20,00


1,20,000


1,20,000
Interest Suspense Account
Dr. Cr.
Date
Particulars
Amount
Date
Particulars
Amount
1.4.10
To Meghna Motor Company
30,000
31.3.11
By Interest A/c
By Balance B/d
16,500
13,500


4,66,500


4,66,500
1.4.11
To Balance b/d
13,500
31.3.11
By Interest A/c
By Balance C/d
11,325
2,175


13,500


13,500
1.4.12
To Balance b/d
2,175
31.3.11
By Interest A/c
2,175


2,175


2,175

5.(a) Duliajan head office sent out goods to its digboi branch at cost plus 25%. The branch remits all cash received to the head office and all expenses of the branch are met by the head office. From the particulars, prepare the following in head office books:
(i) Digboi Branch Account
(ii) Goods sent to Branch Account
Show Branch Debtors Account as a part of working note. 6+3+2=11
Stock at Branch on 1.4.2012 (invoice price) Rs.1800
Stock at Brach on 31.3.2013 (invoice price) Rs.2000
Goods sent to Branch during the year (Invoice Price) Rs.137500
Goods returned by the Branch (Invoice Price) Rs. 7500
Cash Sales Rs. 30000
Credit Sales Rs.99875
Goods returned by customer Rs. 4000
Discount and allowance to customers Rs.6000
Bad debts Rs. 500
Cash Received from customers Rs.104500
Cash sent to Branch:
For Salaries 10000
For Rent 2400
For Sundry Expenses 2500 Rs. 14900
Branch Debtors as on 1.4.2012 Rs. 24000
Solution:
In the books of Duliajan Head office
Digboi Branch A/c
Particulars
Amount
Particulars
Amount
To Opening balance
Stock
Debtors

To Goods sent to branch     1,37,500
Less: Return by branch           (7,500)

To Bank Exp.
Salaries                                10,000
Rent                                        2,400
Sundry Exp.                           2,500

To Stock reserve on (closing)
()
To General Profit

1,800
24,000


1,30,000




14,900

400


635
By Remittance
Cash sales
Collection from Debtors

By Stock Reserve on (Opening)
()

By Goods sent to Branch
()

By Closing balance
Stock
Debtors

30,000
1,04,500

360



26,000




2,000
8,875

1,71,735

1,71,735
Goods Sent to Branch A/c
Particulars
Amount
Particulars
Amount
To Branch Adjustment A/c
To Digboi Branch A/c  (Return)
To Balance c/d
26,000
7,500
1,04,000
By Digboi Branch
1,37,500

1,37,500

1,37,500


Branch Debtors A/c
Particulars
Amount
Particulars
Amount
To Opening balance
To Credit sales
24,000
99,875
By Cash (Remittance)
By Discount
By Bad debt
By Return (customer)
By Closing balance
1,04,500
6,000
500
4,000
8,875

1,23,875

1,23,875

Or

(b) What is a “Branch”? What are the main objectives of maintaining Brach Accounts? How are inter-branch transactions recorded in a branch account? 2+5+4=11
Ans:  Meaning of Branch and Branch Accounting
Branch: The dictionary meaning of the word branch is any subordinate division of a business, subsidiary shop, office etc. Acc to the provisions contained in sec29 of the Companies Act 1956 it would appear that a branch is any establishment carrying on either the same or substantially the same activity as that carried on by head office of the company.
A branch is a separate segment of a business. In order to increase the sales, business houses are requires to market their products over a larger territory and may generally split their business into certain divisions or parts. These various parts or divisions may be located in different part of the same city or in different cities of the same country or in different countries in the world. These are known as branches. The head office controls the activities of various branches.
Branch accounting: Branch accounting is the process through which the accounting system of a branch is maintained.
Objectives of Branch Accounting
The following are the main objects of maintaining branch accounts:
  1. Profit or loss of each branch can be found out
  2. They help in controlling branches
  3. Actual financial position of the business can be found out on the basis of head office and branch accounting periods.
  4. Branch requirements of goods and cash can be estimated.
  5. Suggestions for increasing the efficiency of the branch can be sent on the basis of branch accounts.
  6. They help in complying with the requirements of law because acc to companies act 2013.
Inter-Branch Transactions: Where there are number of branches, inter-branch transactions are likely to take place, e.g., cash or goods sent by one branch to another or expenses incurred by one branch on behalf of another.  Such transactions are usually adjusted assuming that they were entered into under the instructions from the H.O.  Suppose Kolkata branch transfers some goods to Mumbai branch under the directions of the H.O.  The entries will be as follows:
1.
In the books of Kolkata Branch:
Head Office A/c                        Dr                        
       To Goods Supplied to Branch A/c
XXX


XXX
2.
In the books of Mumbai Branch:
Goods received from Branches A/c        Dr           
       To Head Office A/c
XXX


XXX
3.
In the books of Head Office:
Mumbai Branch A/c                      Dr                  
       To Kolkata Branch a/c
XXX


XXX
Note: Inter-branch transactions without the knowledge of head office may be passed as between the branches only in the usual manner.
6. (a) (i) What is “Minimum Rent” in Royalty Account? Why is it important in Royalty Account? 3+3=6
Ans: Minimum Rent:
Minimum Rent is the amount below which landlord never accepts in any year from the person who has to pay royalty in case of mines. Minimum Rent is also known as Fixed Rent, Dead Rent, Flat Rent or Contract Rent. If in any year amount of royalty is less than the amount of minimum rent, the amount of minimum rent is payable by the person who has to pay the royalty, but if the amount of royalty is more than the amount of minimum rent, royalty will be paid.
Importance of Minimum Rent:
Fixation of minimum rent is in the interest of landlord because it guarantees him the receipt of the minimum rent even in the case of low output or sales. In the absence of minimum rent clause, only the actual royalty will be paid to the landlord. Moreover, it also gives incentive to the lessee to enhance production or sales because he is bound to pay minimum rent.
Redeemable Minimum Rent:
Generally, when minimum rent is more than royalty, then minimum rent is payable if no such provision is given in the agreement, but if it is mentioned in the agreement that when royalty will be more than minimum rent, the excess of minimum rent over royalty paid in the earlier years will be written off out of the excess of the royalty over minimum rent in the coming years such minimum rent is called Redeemable Minimum Rent.
(ii) What do you mean by “Recoupment of Shortworkings”? What conditions are to be satisfied for recoupment of shortworkings? 2+3=5
Ans: Recoupment of short working refers to recovering the short working of any year, from surplus royalty of the succeeding years. The right of recoupment of Shortworkings can be:
  1. Restricted or Fixed period or
  2. Unrestricted or Floating period.
When the lessee gets the right of recoupment of Shortworkings for a certain period (say first five years of the lease) commencing from the date of the royalty agreement, the right is said to be restricted or fixed. Any Shortworkings arising beyond this period cannot be reimbursed. But when the lessor allows the lessee to recoup any Shortworkings within two or three subsequent or following years, then the right is said to be unrestricted or floating because this can be availed of in any year when Shortworkings arises.
Conditions for Recoupment or Writing off Shortworkings:
Shortworkings can be recouped only when there is surplus. The Recoupment  may be permitted over a stipulated period of time (fixed Recoupment) or over a specified period following the year of short working (floating Recoupment) or within the life time of the lease(Recoupment within life time of the lease). All the conditions regarding recoupment or writing off Shortworkings are based on the mutual agreement between the lessee and lessor. If Shortworkings could not be recouped within the agreed period, it will be transferred to profit and loss account in the year in which the right of recoupment is lost. By this process, Shortworkings account gets closed and will not appear as an asset in the balance sheet.
Or

(b) Sri Mohini Baruah took a colliery from Sri Kitip Singh on lease for a period of 20 years from 1st April, 2008, on a royalty of Rs.16 per ton of coal raised with a dead rent of Rs.80000 p.a. and power to recoup shortworkings in the first four years of the lease. The annual coal raised were as follows:
Year
Output (in tons)
2008-09
2009-10
2010-11
2011-12
2012-13
3000
3500
5000
8000
10000
From the above particulars, prepare: (i) Royalties Account (ii) Kitip Singh’s Account and (iii) Shortworkings Account in the books of Sri Mohini Baruah. 4+4+3=11
Solution:
ANALYSIS OF ROYALTIES PAYABLE:
Year
Output
Royalty
@ Rs. 16
M/R
Shortworking
Surplus
Recoupment
Written off
Payment
2008-09
2009-10
2010-11
2011-12
2012-13
3,000
3,500
5,000
8,000
10,000
48,000
56,000
80,000
1,28,000
1,60,000
80,000
80,000
80,000
80,000
80,000
32,000
24,000
-
-
-
-
-
-
48,000
80,000
-
-
-
48,000
-
-
-
-
8,000
-
80,000
80,000
80,000
80,000
1,60,000
Royalties A/c
In the books of Sri Mohini Baruah (Lessee)
Date
Particulars
Amount (Dr.)
Date
Particulars
Amount (Cr.)
31-3-09
To Kitip Singh
48,000
31-3-09
By Production A/c
48,000


48,000


48,000
31-3-10
To Kitip Singh
56,000
31-3-10
By Production A/c
56,000


56,000


56,000
31-3-11
To Kitip Singh
80,000
31-3-11
By Production A/c
80,000


80,000


80,000
31-3-12
31-3-12
To Kitip Singh
To Shortworking A/c
80,000
48,000
31-3-12
By Production A/c
1,28,000


1,28,000


1,28,000
31-3-13
To Kitip Singh
1,60,000
31-3-13
By Production A/c
1,60,000


1,60,000


1,60,000


Kitip Singh A/c
Date
Particulars
Amount (Dr.)
Date
Particulars
Amount (Cr.)
31-3-09
To Bank A/c
80,000
31-3-09
31-3-09
By Royalties A/c
By Shortworking A/c
48,000
32,000


80,000


80,000
31-3-10
To Bank A/c
80,000
31-3-10
31-3-10
By Royalties A/c
By Shortworking A/c
56,000
24,000


80,000


80,000
31-3-11
To Bank A/c
80,000
31-3-11
By Royalties A/c
80,000


80,000


80,000
31-3-12
To Bank A/c
80,000
31-3-12
By Royalties A/c
(1,28,000 – 48,000)
80,000


80,000


80,000
31-3-13
To Bank A/c
1,60,000
31-3-13
By Royalties A/c
1,60,000


1,60,000


1,60,000
                                                                                                                                                  
Dr. Shortworking A/c Cr.
Date
Particulars
Amount (Dr.)
Date
Particulars
Amount (Cr.)
31-3-09
To Kitip Singh A/c
32,000
31-3-09
By Balance c/d
32,000


32,000


32,000
1-4-09
31-3-10
To Balance b/d
Ti Kitip Singh A/c
32,000
24,000
31-3-10
By Balance c/d
56,000


56,000


56,000
1-4-10
To Balance b/d
56,000
31-3-11
By Balance c/d
56,000


56,000


56,000
1-4-11
To Balance b/d
56,000
31-3-12
31-3-12
By Royalties A/c
By P/L A/c
48,000
8,000


56,000


56,000

7.(a). What do you mean by “amalgamation of firms”? What are the main objectives of amalgamation? What journal entries are required to pass for the closing the books of an amalgamating firm? 2+4+5=11
Or
(b) The following is the Balance sheet of a partnership firm of Shiv, Shankar and Sambhu as on 31st March, 2013:
Liabilities
Amount
Assets
Amount
Capital:
Shiv
Shankar
Sambhu
Sundry Creditors

25000
20000
15000
10000
Land and Building
Investments
Sundry Creditors
Cash at Bank
40000
10000
5000
15000

70000

70000
The Firm was dissolved on 31st march, 2013 subject to the following conditions:
  1. The creditors were paid off at a discount of 5%
  2. Shiv agreed to take over the land and building at Rs.45000
  3. Shankar agreed to take over the investments at 2500
  4. Sambhu took over the debtors account at Rs.3000
Prepare (i) Realization account, (ii) Partners Capital Account, and (iii) Bank Account showing the effect of dissolution. 4+4+3=11.

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