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.
Amruta Enterprises (having Installed capacity of 2, 00,000 units p.a.) produced 1,00,000 units in the financial year2006-2007. The cost - structure in 2006 - 2007 was as under: (20)
| (a) Raw Materials | 40% | |
| (b) Wages | 15% | |
| (c) Factory Overheads | 10% | |
| (d) Administrative and Selling Overheads | 15% | |
| Total cost | 80% | |
| (e) Profit | 20% | |
| 100 |
The selling price, which was Rs. 500 per unit in 2006-2007, is estimated to be fixed as at Rs. 600 per unit forthe year 2007-2008; and production and sale expected to increase by 40,000 units. It is, further, anticipated that raw materials cost per unit would increase by 10% due to price rise, whereas wage rate per unit would decrease by 20% due to automation, 56% of all the overheads are fixed and balance are variable.
As a Management Accountant you are required to prepare:-
(a) Cost statement for the year 2007-2008 and
(b) Statement showing estimated working capital required for the year 2007-2008 after considering the following additional information:
(a) Raw materials stock equivalent to two and half month’s consumption would be stored.
(b) Production time is one month. Raw materials are introduced at the beginning of the process, whereas wages and factory overheads accrue evenly during the production period.
(c) Two months stock of finished goods (valued at factory cost) would be carried in stock.
(d) 20% of raw materials would be imported from China and advance payment of two months would be made there against. 15% of indigenous raw materials requirement would be procured locally against immediate cash payment. Suppliers of balance of indigenous raw materials, allow a credit of one month.
(e) 50% of customers would enjoy a credit of one month, whereas balance 50% of customers would accept a bill of exchange payable after three months. These bills of exchange are immediately hypothecated with the bank against which overdraft facility would be available equal to 70% of amount of bills of exchange.
(f) Time - lag in payment of wages would be one month and for all overheads, it would be half month.
(g) The company would carry cash balance of Rs. 40,000 in its currency chest. Debtors are to be estimated at selling price.
(h) The activities are spread evenly throughout the year. Degree of completion of work-in-progress is 50%.
Q.2.
The Mismanagement Ltd. always finds that it is hard pressed for funds. In spite of borrowing funds at a high rate from Banks, they are not able to make payments to suppliers in time. The financial position of the company as reflected from the Balance Sheet for the last two years is as under: (16)
| Particulars | 2005 | 2006 | ||
| - | Rs. Lakhs | Rs.Lakhs | Rs. Lakhs | Rs. Lakhs |
| Share Capital | - | - | - | - |
| (Rs. 10 each fully paid) | 10.00 | - | 10.00 | - |
| Profit and Loss A/c | 1.65 | 11.65 | 0.45 | 10.45 |
| Bank Overdraft | - | 1.55 | - | 5.95 |
| Sundry Creditors | - | 1.00 | - | 6.00 |
| - | - | 14.20 | - | 22.40 |
| Land and Buildings | - | 3.00 | - | 5.00 |
| Plant and Machinery | 5.00 | - | 6.00 | - |
| Less: Depreciation | 1.20 | 3.80 | 1.80 | 4.20 |
| Motor Cars | - | 1.00 | - | 1.30 |
| Less: Depreciation | 0.40 | 0.60 | 0.60 | 0.70 |
| Stock | - | 2.20 | - | 7.20 |
| Debtors | - | 4.60 | - | 5.30 |
| - | - | 14.20 | - | 22.40 |
The following further information is available:
(a) Dividend was paid in 2006 at the rate of 10%.
(b) The company sold a motor car during 2006 for Rs. 8,000. This was purchased for Rs. 10,000 and its written down value in the books on 1-1-2006 was Rs. 5,000.
Prepare cash flow statement as per AS-3 by indirect method.
Q.3.
From the following particulars prepare a statement of sources and application of funds for the year ended 31-3-2006of M/s. Rimzim Ltd: (16)
(a) Rimzim Ltd. issued 1,000 shares of Rs. 120 each and all shares are subscribed and fully paid up.
(b) The company has redeemed preference shares for Rs. 1,00,000 at 10% premium. Premium was adjusted against securities premium.
(c) Investments are sold for Rs. 50,000 (resulting in profit of Rs. 10,000).
(d) Sale of machinery during the year Rs. 30,000 (resulting in loss of 5,000).
(e) Purchase of Fixed assets Rs. 1,20,000.
(f) Dividend paid Rs. 40,000 and income tax paid Rs. 35,000.
(g) Working capital of the company was Rs. 1,20,000 on 1-4-2005 and Rs. 1,80,000 on 31-3-2006.
(i) Depreciation provided for the year was Rs. 50,000 and preliminary expenses written off was Rs. 10,000.
Q.4.
Following balances from the books of Account CHETAN Ltd. for the year ended 31-12-2006 you are required to prepare vertical income statement and vertical Balance sheet: (16)
| Particulars | Amount Rs. | Particulars | Amount Rs. |
| Advertising | 25,000 | Sales Return | 10,000 |
| Interest Received | 6,000 | Bills Payable | 43,000 |
| Sales | 12,00,000 | 10% Pref. Share Capital | 1,50,000 |
| Equity Share Capital | 9,00,000 | Debenture Interest | 24,000 |
| Salaries | 1,80,000 | Wages | 1,85,000 |
| Furniture and Fixture | 2,00,000 | Cash and Bank Balance | 80,000 |
| Outstanding Expenses | 25,000 | Debtors | 2,00,000 |
| P/L A/c (Credit. Balance) | 1,30,000 | Opening Stock | 50,000 |
| Bad Debts | 5,000 | General Reserve | 75,000 |
| Purchases | 6,00,000 | Creditors | 1,00,000 |
| Machinery | 7,50,000 | 8% Debenture | 4,00,000 |
| Preliminary Expenses | 10,000 | ||
| Income Tax | 10,000 | ||
| Land and Building | 7,00,000 |
Closing Stock on 31-12-2006 is Rs. 1,50 000.
Q.5.
Financial Position (16)
| Liabilities | 2005 Rs. | 2006 Rs. |
| Equity Share Capital | 2,00,000 | 2,50,000 |
| 10% Pref. Share Capital | 2,00,000 | 1,50,000 |
| Reserve Fund | 80,000 | 1,00,000 |
| Profit and Loss Account | 1,00,000 | 1,50,000 |
| 12% Debentures | 2,00,000 | 3,00,000 |
| Creditors | 1,00,000 | 1,20,000 |
| Bank Overdraft | 50,000 | 20,000 |
| Assets | - | - |
| Building | 3,00,000 | 3,20,000 |
| Machinery | 1,50,000 | 1,80,000 |
| Furniture | 40,000 | 35,000 |
| Investment | 1,00,000 | 1,50,000 |
| Stock | 1,50,000 | 2,00,000 |
| Debtors | 1,00,000 | 1,20,000 |
| Bank Balance | 90,000 | 85,000 |
From the above information of Santhan Ltd. as at 31st March, 2005 and 2006 you are required to comment with the help of comparative statement, after rearranging in suitable form for analysis.
Q.6.
Following is the Profit and Loss A/c and Balance Sheet of Adhiraj Ltd. (16)
| Profit and Loss A/c for the Year ended 31st December, 2006 | |||
|---|---|---|---|
| Particulars | Rs. | Particulars | Rs. |
| To Opening Stock | 20,000 | By Sales | 4,50,000 |
| To Purchases | 2,00,000 | By Closing Stock | 80,000 |
| To Wages | 50,000 | - | - |
| To Factory Expenses | 70,000 | - | - |
| To G. P. c/d | 1,90,000 | - | - |
| 5,30,000 | 5,30,000 | ||
| To Administrative Expenses | 60,000 | By Gross Profit b/d | 1,90,000 |
| To Selling Expenses | 40,000 | By Interest Received | 5,000 |
| To Interest on Loan | - | 5,000 | - |
| To Debenture Interest | 8,000 | - | - |
| To Net Profit | 82,000 | - | - |
| - | 1,95,000 | - | 1,95,000 |
| To Tax Provision | 20,000 | By Net Profit | 82,000 |
| To Proposed Dividend 20,000 | - | - | |
| To Balance Profit | 42,000 | - | - |
| - | 82,000 | 82,000 |
| Balance Sheet as on 31st December, 2006 | |||
|---|---|---|---|
| Liabilities | Amount Rs. | Assets | Amount Rs. |
| Equity Share Capital (Rs. 10) | 2,00,000 | Land and Building | 1,75,000 |
| 9% Preference Share Capital | 1,50,000 | Machinery | 1,50,000 |
| 8% Debenture | 1,00,000 | Furniture | 1,00,000 |
| Reserve | 50,000 | Goodwill | 50,000 |
| P/L A/c | 30,000 | Patents | 50,000 |
| Short Term Loan | 1,00,000 | Vehicles | 1,40,000 |
| (Repaid within one year) | Investment | 50,000 | |
| Bank Overdraft | 75,000 | Stock | 80,000 |
| Sundry Creditors | 1,40,000 | Debtors | 90,000 |
| Bills Payable | 30,000 | Bills Receivable | 30,000 |
| Provision for Tax | 20,000 | ||
| Proposed Divided | 20.000 | ||
| - | 9,15,000 | - | 9,15,000 |
Q.7.
The following information are available for a firm for the year ended 31-12-2006: (16)
(a) Gross Profit Ratio - 25%
(b) Net Profit Ratio - 20%
(c) Stock Turnover Ratio - 10 times
(d) Net Profit/Capital - 1/5
(e) Capital/Other Liabilities - 1/2
(f) Fixed Assets/Capital - 5/4
(g)Fixed Assets/Current Assets - 5/7
(h)Fixed Assets - Rs. 5, 00,000
(i) Stock at the end Rs. 40,000 more than the stock, in the beginning.
Find Out:
(a) Cost of Goods Sold
(b) Gross Profit
(c) Net Profit
(d) Current Assets
(e) Capital
(f) Total Liabilities
(g) Closing Stock
(h) Total Assets
Q.8.
Calculate trend percentage from the following information extracted from financial statements of Perfect Ltd. afterarranging in vertical form and give your comments:(16)
(RS. '000)
| Particular | 2003 Rs. | 2004 Rs. | 2005 Rs. | 2006 Rs. |
| Sales | 50,000 | 60,000 | 70,000 | 90,000 |
| Cost of Goods Sold | 30,000 | 36,000 | 42,000 | 54,000 |
| Operating Expenses | 10,00 | 11,000 | 12,000 | 13,000 |
| Income Tax | 50% | 50% | 50% | 50% |
| Fixed Assets | 10,000 | ? | 15,000 | ? |
| Net Worth | ? | 12,000 | ? | 16,000 |
| Working Capital | 5,000 | 5,500 | 6,000 | 6,500 |
| Long Term Loans | 5,000 | 6,000 | 7,000 | 8,000 |
Q.9.
(a) What is the impact of conversion of part of Debentures into equity shares on Debt-Equity Ratio which wasbefore conversion 1:1? (2)
(b) State the impact of cash sales Rs. 40,000 (Cost Rs. 25,000) on Quick Ratio and Current Ratio. (2)
(c) What is the impact of making adjustment of Interest Accrued on Debentures on Return on Capital Employed?(2)
(d) Write short notes on any two: (10)
(i) MIS Report.
(ii) Manipulation of Accounts.
(iii) Uses of Ratio Analysis.
(iv) Flow of Funds.
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