March 2004
Time: 3Hours Marks: 100
NB:
1. Questions No. 1 is compulsory and carries 20 marks.
2. Attempt any five from the rest questions,each carrying 16 marks
from remaining questions.
3. Working notes should form part of your answer.
4.Proper presentation and neatness is essential.
5. Use of simple calculator is allowed
Q.1.
Following are the Balance Sheets of Swaraj Ltd. as on 31st Dec. 2002 and 31st Dec. 2003 respectively.
| Liabilities | 2002 Rs. | 2003 Rs. | Assets | 2002 Rs. | 2003 Rs. |
| Equity Share Capital | 3,00,000 | 6,00,000 | Goodwill | 10,000 | 5,000 |
| Reserves | 1,12,000 | 1,82,600 | Land ( At Cost ) | 3,00,000 | 3,85,000 |
| Profit & Loss A/c. | 37,700 | 75,700 | Plant & Machinery | 2,10,000 | 3,00,000 |
| 11% Debentures | 2,25,000 | - | ( At Cost ) | - | - |
| Sundry Creditors | 1,67,300 | 1,72,700 | Long Term Investment | 1,67,000 | 1,83,000 |
| Bills Payable | 16,000 | 9,000 | ( At Cost ) | - | - |
| Outstanding Expenses | 12,000 | 24,000 | Stock In Trade | 27,000 | 43,000 |
| Bank Overdraft | - | 5,000 | Sundry Debtors | 1,31,000 | 1,34,000 |
| - | - | - | Bills Receivable | 16,000 | 11,000 |
| - | - | - | Prepaid Expenses | 3,000 | 2,000 |
| - | - | - | Cash at Bank | 6,000 | - |
| - | - | - | Share Issue Expenses | - | 6,000 |
| Total | 8,70,000 | 10,69,000 | Total | 8,70,000 | 10,69,000 |
Additional Information :
(1)Balance of Accumulated Depreciation Account as on 31st December 2002 and 31st December 2003 has been included in the balance of 'Reserves" as on 31st December 2002& 31st December 2003 respectively.
(2)Verification of Fixed Assets Register of the Co. reveals that the Co. purchased its first Plant & Machinery on 1st January 2002 for Rs. 2,10,000 and 2nd on 1st July 2003 for Rs. 90,000.
(3)In the year 2003 Investment costing Rs. 27,000 were sold for Rs. 36,000.
(4)Co. provides depreciation @ 20% p.a. on Plant and Machinery under Diminishing Balance Method.
(5)One-third of share issue expenses were written off during the year 2003.
You are required to prepare :
(a)Schedule of changes in Working Capital [Together with itemwise changes (increases or decreases) in working capital].
(b)Statement of Sources and Applications of Funds for the year ended 31st December, 2003.
Q.2.
| Balance Sheet as on 31st December, 2003 | |||
|---|---|---|---|
| Liabilities | Rs. | Assets | Rs. |
| Capital Reserve | 1,26,000 | Copyright | 1,00,000 |
| General Reserve | 1,20,000 | Cash | 21,000 |
| Provision for Tax | 50,000 | Calls in Arrears | 9,575 |
| Commission received in Adv. | 10,875 | Plant & Machinery | 4,20,000 |
| 15% Debentures | 1,60,000 | Debtors | 3,00,425 |
| 12% Bank Loan | 40,000 | Prepaid Insurance | 15,375 |
| 6% Pref. Share Capital | 2,00,000 | Land & Building | 5,00,000 |
| Equity Share Capital | 10,00,000 | Fixtures | 25,000 |
| Bills Payable | 49,125 | Furniture | 75,000 |
| Profit and Loss A/c. | 9,000 | Preliminary Expenses | 18,625 |
| Bank Overdraft | 10,740 | Goodwill | 1,00,000 |
| Share Premium | 15,000 | Investments (Long Term) | 1,75,000 |
| Sundry Creditors | 1,89,260 | Stock | 2,00,700 |
| - | - | Marketable Investments | 19,300 |
| - | 19,80,000 | - | 19,80,000 |
You are required to rearrange the above Balance Sheet in vertical form and compute the following ratios:
(a)Current Ratio
(b)Proprietory Ratio
(c)Capital Gearing Ratio
Q.3. Following Trial Balance was extracted from the books of Castalloys Pvt. Ltd. for the year ended 31st Dec. 2003. (16)
| Particulars | Rs. | Particulars | Rs. |
| Land & Building | 90,000 | Sundry Creditors | 30,600 |
| Plant & Machinery | 1,65,600 | Reserves | 15,000 |
| Furniture & Fittings | 3,600 | Profit & Loss A/c 1-1-2003 | 8,800 |
| Preliminary Expenses | 4,900 | Bank Overdraft | 11,180 |
| Calls in arrears (at Rs. 20 per share) | 2,500 | Return Outwards | 5,000 |
| Cash in hand | 500 | Sales | 3,07,800 |
| 5% Govt. Bonds (F.V. 10,000) | 9,880 | Share Capital | 2,00,000 |
| Bills Receivable | 23,000 | 6% debentures | 1,00,000 |
| Delivery Van | 3,000 | - | - |
| Goodwill | 16,000 | - | - |
| Sundry debtors | 20,800 | - | - |
| Purchases | 2,40,000 | - | - |
| Advertising | 2,540 | - | - |
| Sales Return | 7,000 | - | - |
| Legal Charges | 1,000 | - | - |
| Carriage Inwards | 3,700 | - | - |
| Wages | 23,200 | - | - |
| Rent, Rates and Insurance | 2,900 | - | - |
| Stock 1-1-2003 | 47,600 | - | - |
| Prepaid Expenses | 2,800 | - | - |
| Trade Expenses | 1,500 | - | - |
| Repairs to Plant & Machinery | 860 | - | - |
| Interim Dividend paid | 3,500 | - | - |
| Salaries | 2,000 | - | |
| - | 6,78,380 | - | 6,78,380 |
You are required to prepare Profit & Loss account and Balance Sheet in Vertical Format as per Management Accounting after taking into consideration the following adjustments:
(1) Charge 5 % Depreciation on Plant and Machinery, 7.5% on Furniture & Fittings and 20% on Delivery Van.
(2) Closing stock was Rs. 54,200 as on 31st December, 2003
(3) The Directors have proposed a final dividend of 6% on paid up share capital.
(4) Interest on Govt. Bonds and Debentures is due for the year 2003.
Q.4.
Complete the following Comparative Statements of DT Ltd. by ascertaining the missing balances. (16)
| Particulars | 2002Rs. | 2003 Rs. | Absolute Increase or Decrease | % Increase or Decrease |
| (A) Sales | ? | ? | (+)4,00,000 | +25.00% |
| Cost of goods sold | - | - | - | - |
| Opening Stock | 80,000 | 1,20,000 | ? | ? |
| Purchases | ? | ? | (+)2,00,000 | +20.00% |
| Wages | 2,40,000 | 4,40,000 | ? | ? |
| Less: Closing Stock | ? | 1,60,000 | ? | ? |
| (B) Cost of goods sold | ? | ? | ? | ? |
| (C) Gross Profit (A-B) | ? | ? | ? | ? |
| Less: Operating Expenses | - | - | - | - |
| a.Administrative | ? | ? | (+)20,000 | +20.00% |
| b. Selling | 50,000 | 60,000 | ? | ? |
| c. Finance | ? | ? | (+)4,500 | +22.50% |
| (D) Total Operating Expenses | ? | ? | ? | ? |
| Net Operating Profit (C-D) | ? | ? | ? | ? |
| Add : Non-Operating Income | 20,000 | 1,00,000 | ? | ? |
| Net Profit before Tax | ? | ? | ? | ? |
| Less : Provision for Tax | ? | ? | ? | ? |
| Net Profit after Tax | 2,10,000 | 2,35,000 | ? | ? |
Q.5.
From following details, prepare working capital estimate for 2004:
Raw Material - Rs. 125 per unit
Fixed Wages - Rs. 9,00,000 per annum
Variable wages - Rs. 40 per unit
Fixed Overheads - Rs. 6,60,000 per annum
Variable Overheads - Rs. 9 per unit
Level of activity of purchases production and sales - 60000 units per annum
Other Information :
(1) Raw Material stock 1.5 months
(2) Process time 1 month & to include fixed wages & overheads full, variable wages & overheads 40 %
(3) Finished goods stock 1 month.
(4) M.R.P. of the product is arrived at by calculating 20 % profit on sales price.
(5) 25 % of the sales are to wholesalers giving them 10% discount. Credit given to 40% wholesalers two months against acceptance of bill and balance one month credit.
(6) Balance sales to retailers. Half of it on cash basis by giving 2% discount, balance half on one month credit
(7) Cash required 15% of net working capital.
(8) For material purchases we accept bill for two months for 25% of quantity and for balance we receive credit for 1.5 months.
(9) Fixed wages are paid 1/2 month in advance.
(10) Fixed overheads are paid 1 month in advance.
(11) Variable wages time lag is one month.
(12) Variable overheads time lag is half month.
Q.6.
(A) Current Liabilities and Current Assets of D. K. Ltd. were as under: (12)
| Current Liabilities | Rs. | Current Assets | Rs. |
| Creditors | 1,00,000 | Stock (at cost) | 75,000 |
| Bank Overdraft | 25,000 | Debtors | 1,25,000 |
| Total Current Liabilities | Rs. 1,25,000 | Total current Assets | Rs. 2,00,000 |
Note: The Co. can avail the overdraft facility upto Rs. 75,000.
Explain in detail the effects of the following transactions on Current Ratio and Working Capital of the Co.Consider each transaction separately. (Do not give cumulative effects of the transactions)
(1) Purchased Goods worth Rs. 25,000 and issued a cheque of Rs. 25,000 against the said purchases.
(2) Received a cheque of Rs. 30,000 from one of the customers and deposited the same into Bank in overdraft A/c.
(3) Sold Goods costing Rs. 25,000 for Rs. 35,000 on credit.
(4) Bills Receivable of Rs. 15,000 which was discounted in the Bank is now dishonoured.
(B)
Gross Profit Ratio of Jyoti Ltd. for the year 2002 was 25% and in the year 2003 it came down to 15%. What could be the reasons for decrease in Gross Profit Ratio of the Co. (Give only Four Reasons) .(4)
Q.7.
Following are Balance Sheets of Rudraksha Ltd. as on 31st Dec. 2002 & 31st Dec 2003.
| LIABILITIES | 31-12-2002 Rs. | 31-12-2003 Rs. | ASSETS | 31-12-2002 Rs. | 31-12-2003 Rs. |
| Equity Share Capital | 12,00,000 | 16,00,000 | Land & Building | 4,04,000 | 4,32,000 |
| 10% Pref. Share Capital | 8,00,000 | 6,00,000 | Machinery | 8,40,000 | 10,20,000 |
| 12% Debentures | 1,00,000 | 50,000 | Goodwill | 50,000 | 40,000 |
| Profit & Loss A/c | 3,70,000 | 3,04,000 | Patents | 60,000 | 48,000 |
| Other Reserves | 1,04,000 | 1,90,000 | Investments | 8,02,000 | 8,02,000 |
| Share Premium | 20,000 | 60,000 | Inventory | 5,70,000 | 6,74,000 |
| Creditors | 1,80,000 | 2,00,000 | Debtors | 2,60,000 | 2,92,000 |
| Bills Payable | 24,000 | 70,000 | Prepaid Expenses | 8,000 | 10,000 |
| Bank Overdraft | - | 18,000 | Cash Balance | 20,000 | 4,000 |
| Prov. for Taxation | 76,000 | 80,000 | Advance Tax | 60,000 | 70,000 |
| Proposed Dividend | - | - | - | - | - |
| Equity Share | 1,20,000 | 1,60,000 | - | - | - |
| Preference Share | 80,000 | 60,000 | - | - | - |
| - | 30,74,000 | 33,92,000 | - | 30,74,000 | 33,92,000 |
Other Information :
(1) Liability for taxation for the year 2002 amounted to Rs. 65,000.
(2) Machinery having w.d.v, of Rs. 22,000 was sold at profit of Rs. 3,000 and new machinery purchased at Rs. 2,30,000
(3) Equity shares are issued @ 15% premium
(4) Preference shares were redeemed at a premium of 10%
(5) Debentures were redeemed at a premium of 10%.
You are required to prepare Cash Flow Statement for the year ended 31st Dec. 2003.
Q.8.
Complete the following Balance Sheet from the information given below :(16)
| Liabilities | Rs. | Assets | Rs. |
| Equity Share Capital | ? | Fixed Assets | ? |
| (of Rs. 100 each) | - | - | - |
| Reserve & Surplus | ? | Current Assets | - |
| 10% Debentures | 400,000 | Stock | ? |
| Current Liabilities | - | Debtors | ? |
| Sundry Creditors | ? | Other Current Assets | ? |
| Other Current Liabilities | 200,000 | - | - |
| - | ? | - | ? |
Following information is available :
(1)Sales for the year Rs. 48 lakhs
(2)Gross Profit Ratio 25%
(3)Net Profit after tax Rs. 2,00,000
(4)Purchases and Sales on credit basis.
(5)Debtors Turnover Ratio 12 times (Sales/Debtors).
(6)Creditors Turnover Ratio 12 times (Cost of Sales/Creditors)
(7)E.P.S. Rs. 20 per share
(8)Stock Turnover Ratio 10 times
(9)Debt Equity Ratio 0.25 : 1
(10)Current Ratio 1.6. : 1.
Q.9.
(A) State True or False (with reasons): (12)
(1)All Current liabilities are quick liabilities.
(2)Contingent liabilities do appear in the Balance sheet.
(3)Floating assets means fixed assets.
(4)Intra firm analysis involves analysis of performance of two different organisations.
(5)Decrease in sale price without corresponding decrease in cost of good sold increases gross profit ratio.
(6)Payment of cash to creditors will improve Current ratio.
(B) Write short notes (any one):(4)
(1)Benefits of using computers for MIS.
(2)Factors determining working capital.
(3)Window Dressing of Current Ratio.
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