2007 Bangalore University II Semester B.B.M. Examination, May/June 2007 Question paper
II Semester B.B.M. Examination, May/June 2007
(Semester Scheme)
MANAGEMENT (Paper-2.4)
Financial Accounting – II
Time: 3 Hours Max. Marks: 90
Instructions: Answers should be written in English only.
SECTION-A
Answer any ten sub-questions from the following. Each question carries 2 marks
(10x2=20)
I. a) What is “Partnership”?
b) What do you mean by fixed and fluctuating capital system?
c) Bring out any two objectives of conversion of firm into a Joint Stock Company.
d) Mention methods of purchase consideration.
e) Bring out any two features of instalment sale.
f) What do you mean by hire purchase price?
g) Can a seller seize the goods sold under hire purchase system? Why?
h) Define Royalty.
i) What is under insurance?
j) What Journal entry do pass to close the debit balance in the Realisation Account?
k) Find out sales when cost of goods sold is Rs. 1,60,000 and gross profit ratio is 20% on sales.
l) If the goods worth Rs. 9,00,000 is insured for Rs. 6,27,000 and the actual goods destroyed is Rs. 5,40,000. Calculate the amount of claim if there is average clause.
SECTION-B
Answer any 5 questions. Each question carries 5 marks (5x5=25)
2. Prepare an analytical table from the following Royalty: Re.1 per ton of output:
Minimum Rent: Rs. 30,000 per annum: Right of recoupment of shortworkings upto 3
years – output during first four years – 20,000, 28,000, 36,000, 40,000 tons
respectively.
3. Calculate the amount of interest included in each instalment.
Cash price – Rs. 2,00,000, Dowry payment Rs. 50,000, Three instalment of Rs. 6,000
each payable at the end of each year.
4. Mr. Rama and Krishna commenced their business with Capital of Rs. 2,40,000 and Rs.
1,80,000 respectively on 1.4.2005. They decided to share profit in the ratio of 3:2, for
the year ended 31.3.2006, they earned profit of Rs. 72,000 before allowing.
i) Interest on capital at 6% P.A.
ii) Interest on drawings – Rama – Rs. 450, and Krishna – Rs. 300/-.
iii) Partners salary to Rama – Rs. 9,000 P.A.
iv) Drawings during the year amounted to Rs. 20,000 – Rama and Rs. 15,000 – Krishna. Prepare profit and loss appropriation account.
5. Calculate the cash price of an asset sold under Hire purchase System from the following details.
Down payment Rs. 12,000, 1st half yearly instalment Rs. 28,800, second half yearly instalment Rs. 26,600, third half yearly isntalment of Rs. 24,400, fourth half yearly instalment Rs. 24,200. Rate if interest 20% P.A.
6. Bring out the meaning and 4 differences between “Hire Purchase System and Instalment system of sale”.
7. What are the accounting procedure involved in the sale of firm to a limited company?
8. Calculate the amount of purchase consideration from the following details:
The purchase company agreed to issue 30,000 equity shares of Rs. 10 each valued at Rs. 15 each. 20,000 9% debentures of Rs. 10 each at a discount of 5% (Percent) and pay cash equal to 10 percent of face value of shares. Company agreed to meet realisation expenses of Rs. 5,000.
9. A fire broke out in the premises of Gowda, a merchant on 30.09.05. he desires to file a claim with fire insurance company for loss of goods and gives you the following information. Calculate fire claims.
Final accounts of Mr. Gowda were prepared on 31.12.04.
Stock on 31.12.04 were Rs. 45,000.
Sales from 1.1.05 to 20.09.05 amounted to Rs. 4,02,000.
Sundry creditors on 1.1.05 were Rs. 75,000 (opening), Sundry creditors on 30-9-05 were Rs. 60,000 (closing), Cash paid to creditors were Rs. 3,90,000 Normal rate of Gross profit 20% sales.
SECTION-C
Answer any 3 questions from the following. Each question carries 15 marks. (3x15=45)
10. Sunil purchased a plant costing Rs. 4,00,000 on 1.04.04 under Hire purchase system. The terms being Rs. 1,00,000 down, and the balance in 3 equal instalments together with interest at 20% P.A. on the outstanding cash price. Depreciation is to be charged at 15% P.A. under diminishing balance method. Prepare necessary ledger accounts in the books of Sunil under assets accrual method.
11. Raj took lease of an “oil-well” from Gopal Oil Ltd., on 1.1.04. The minimum rent was Rs. 1,00,000 and royalty was as 20 per ton of crude oil raised. The short workings were recoverable in the succeeding two years of such shortworking,s but on the condition that if during the next year of any shortworkings, the lessee is unable to recover teh same (either fully or partly), he will lose the right to recover 50% of such uncovered amount of shortworkings. The output during eh first 4 years respectively were, 2,750; 4,000; 5,625; 6,250 tons. Prepare minimum rent account, royalty account, shourtworking account and Gopal Oil Ltd. in the books of Raj.
12. A fire occured in the shop of Nandini on 15.10.2002. Calculate the fire claims.
Rs.
Sock on hand 1.1.2001 30,600
Purchases – 1.1.2001 to 31.12.2001 1,22,000
Sales from “ “ 1,80,000
Stock on 31.12.2001 27,000
Purchases from 1.1.2002 to 14.10.2002 1,47,000
Sales from “ “ 1,50,000
Nandini had always valued the stock on hand at 90% of cost price.
Salvage Rs. 18,000, Policy was taken for Rs. 63,000, There is average clause in the policy.
13. P and Q are partners sharing profits and losses in the ratio of 2:1 and their balance sheet as on 31.12.2005 was as follows:
Liabilities Rs. Assets. Rs.
Creditors 1,60,000 Cash in hand 1,200
Bills payable 40,000 Bill Receivable 20,000
P’s loan 80,000 Drs. 2,40,000
Capital Less R.B.D. 12,000 2,28,000
P – 1,20,000 Stock 1,74,800
Q – 80,000 2,00,000 Machinery 80,000
Reserve fund 24,000
5,04,000 5,04,000
They agreed to sell the business to a limited company and the compnay to take over the assets and liabilities as follows:
Machinery at Rs. 64,00, stock at Rs. 1,40,000, drs. Rs. 2,02,800 B.R. at Rs. 20,000, and Goodwill at Rs. 24,000. The company agreed to take over creditors at Rs. 1,52,000 and B.P at Rs. 40,000
The firm received Rs. 1,60,000 of purchase price in as 10 fully paid equity shares and the balance in cash.
Distribute the shares in the ratio of 3:2 between the partners. Prepare the necessary ledger accounts in the books of the firm.
14. Following is the trial balance of A and B who share profits and losses equally for the year ending 31.3.2005.
Debit Credit
Rs. Rs.
A’s capital 39,000
B’s capital 20,000
Opening stock 6,000
Purchases and sales 72,000 98,000
Discount 2,200 4,400
Salaries 12,000
Rent 6,000
Trade Expenses 500
Commission 4,900
Drs. and Creditors 28,000 17,000
Machinery 25,000
Cash 25,000
Rent received 2,500
Loan from Bank 10,000
Interest on loan 3,900
B. R and B.P 5,000 1,000
Miscellaneous receipts 800
Insurance 3,000
Printing 2,000
Commission 3,300
1,96,000 1,96,000
Adjustments:
1) Stock at the end Rs. 12,000
2) Commission earned but not received Rs. 10,000
3) Provide depreciation – machinery at 10% P.A.
4) Outstanding expenses – salary Rs. 1,000, Rent Rs. 1,500
5) Create reserve for doubtful debts at 5% on debtors.
6) Pre-paid insurance amounted to Rs. 500
Prepare Trading and Profit and Loss Account and Balance Sheet as on 31.3.2005.
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