October 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 C Ltd. as at 31st March,2003 and 31st March,2004:
| Liabilities | 31-03-03 Rs. | 31-03-04 Rs. | Assets | 31-03-03 Rs. | 31-03-04 Rs. |
| Equity Share Capital | 65,000 | 1,00,000 | Land & Buildings (At cost) | 29,000 | 45,000 |
| Profit & loss Account | 25,000 | 37,400 | Furniture (At cost) | 16,000 | 11,000 |
| Sundry Creditors | 99,999 | 1,11,111 | Motor Vehicle (At cost) | 20,000 | 41,000 |
| Bills Payable | 20,001 | 18,889 | Investments(Long Term) | 52,100 | 46,600 |
| Accumulated Depreciation : | - | - | Inventory | 62,500 | 97,600 |
| Land & Building | 12,000 | 9,000 | Book Debts | 39,900 | 34,100 |
| Furniture | 6,000 | 5,600 | Cash in hand | 17,500 | 23,700 |
| Motor Vehicle | 9,000 | 17,000 | - | - | - |
| Total | 2,37,000 | 2,99,000 | Total | 2,37,000 | 2,99,000 |
Additional Information:
i) Building costing Rs. 19,000 accumulated depreciation thereon being Rs. 8,000 was sold for Rs. 25,000.
ii) No furniture was purchased during the year, however, part of the furniture on which accumulated depreciation provided Rs. 1,000 was sold for Rs. 2,500.
iii) Investments are recorded in the books at cost price. Part of the investments being worthless were written off during the year.
You are required to prepare:
(a) Statement showing in detail, item-wise increase and decreases in working capital.
(b) Statement of sources and Application of funds.
(c) Other working notes.
Q.2.
Following financial statements are of XYZ Ltd. for 2004 (16)
| Particulars | Rs. | Particulars | Rs. |
| To opening stock | 70,000 | By Sales | 16,60,000 |
| To Purchases | 15,00,000 | By Closing Stock | 1,60,000 |
| To Gross Profit | 2,50,000 | - | - |
| - | 18,20,000 | - | 18,20,000 |
| To Depreciation | 36,000 | By Gross Profit | 2,50,000 |
| To Other Expenses | 74,000 | By Commission | 10,000 |
| To Tax Provision | 40,000 | - | - |
| To Proposed Dividend | 16,000 | - | - |
| To Net Profit | 94,000 | - | |
| - | 2,60,000 | - | 2,60,000 |
| Share Capital | 3,00,000 | Cash | 48,000 |
| Bank Overdraft | 38,000 | Stock | 1,60,000 |
| Creditors | 34,000 | Debtors | 1,38,400 |
| Provision for Depreciation | 54,000 | Land and Building | 92,000 |
| Provision for tax | 40,000 | Machinery | 1,28,600 |
| Proposed Dividend | 16,000 | Goodwill | 20,000 |
| Profit & Loss A/c | 1,80,000 | Loan and Advance | 60,000 |
| - | - | Preliminary Expenses | 15,000 |
| - | 6,62,000 | - | 6,62,000 |
Re-arrange the above in a vertical form & also calculate:
(a) Stock Turnover Ratio.
(b) Debtors Turnover Ratio.
(c) Creditors turnover Ratio.
Q.3.
From the following Balance Sheets as on 31st March, 2003 & 31st March, 2004 of M/s Dhoom Pvt. Ltd. prepare common Size Financial Statements in vertical form. (16)
| Liabilities | 2003Rs. | 2004 Rs. | Assets | 2003 Rs. | 2004 Rs. |
| Share Capital | 4,00,000 | 5,00,000 | Fixed Assets | 5,40,000 | 6,72,000 |
| General Reserve | 20,000 | 40,000 | Investments | 1,30,000 | 90,000 |
| Profit & Loss A/c | 50,000 | 60,000 | Stock | 90,000 | 85,000 |
| 12% Debentures | 1,00,000 | 1,50,000 | Debtors | 25,000 | 45,000 |
| Creditors | 1,35,000 | 45,000 | Bills Receivable | -- | 35,000 |
| Proposed Dividend | 40,000 | 50,000 | Cash | 10,000 | 5,000 |
| Provision for Tax | 60,000 | 80,000 | Bank | 8,000 | -- |
| Bank Overdraft | -- | 10,000 | Misc. Expenditure | 2,000 | 3,000 |
| Total | 8,05,000 | 9,35,000 | Total | 8,05,000 | 9,35,000 |
Q.4.
From the following Trial Balance of Jyoti Ltd. as on 31st March, 2004, prepare vertical Revenue Statement for the year ended 31st March, 2004 & vertical Balance Sheet as on that date after making the necessary adjustments: (16)
| Particulars | Rs. | Rs. |
| Equity Share Capital | - | 11,00,000 |
| Plant & Machinery | 12,00,000 | - |
| Sales | - | 37,00,000 |
| Purchases | 17,00,000 | - |
| Sundry Debtors | 9,00,000 | - |
| Sundry Creditors | - | 8,50,000 |
| Wages | 3,50,000 | - |
| Opening Stock | 1,20,000 | - |
| Salaries | 1,80,000 | - |
| Advertisement | 75,000 | - |
| Telephone Charges | 35,000 | |
| Furniture | 2,00,000 | - |
| Investments (Long Term) | 5,00,000 | - |
| Interest Received | - | 40,000 |
| Loss on Sale of Furniture | 20,000 | - |
| Commission | 60,000 | |
| Profit & Loss A/c | - | 1,20,000 |
| Interim Dividend | 50,000 | |
| General Reserve | - | 1,00,000 |
| Cash at Bank | 3,20,000 | |
| Bills Receivable | 2,00,000 | - |
Adjustments:
(1) Stock on 31st March, 2004 was valued at Rs. 3,00,000.
(2) Make Provision of Rs. 3,00,000 for Income Tax.
(3) Depreciate Plant & Machinery @ 20% & Furniture @ 10%.
Q.5.
Aryan ceremics is going to produce and sale 5000 units per month in the year 2004. (16)
The material required per unit is Rs. 550. The direct Labour is Rs. 12,00,000 per month. The expenses are Rs. 1,26,00,000 p.a. The sale price is fixed by calculating profit at 20% on sale price.
Calculate requirement of working capital for 2004 by taking into consideration following information:
(1) Stock of raw material will be two months.
(2) Process time is one month.
(3) Stock of finished goods will be 1.5 months.
(4) Credit allowed to 50% customer’s two months on acceptance of bill & balance 50% customers given one month credit.
(5) 25% of expenses are paid one month in advance & balance 75% is paid after one month.
(6) Time lag in payment of wages is one month.
(7) 20% of material is purchased on cash basis & suppliers of 80% material give 1.5 months credit.
(8) Cash required is 15% of net working capital.
Q.6.
Complete the following comparative statement of Swaraj Pvt. Ltd. by ascertaining the missing figure. (16)
| Particulars | 2002 Rs. | 2003 Rs. | Absolute Increase or Decrease Rs. | % Increase or Decrease Rs. |
| (A) SOURCES OF FUNDS | - | - | - | - |
| Equity Share Capital | 1,20,000 | 1,20,000 | - | - |
| Reserves & Surplus | 20,000 | 48,000 | ? | ? |
| OWNER’S FUNDS | 1,40,000 | 1,68,000 | ? | ? |
| BORROWED FUNDS: | - | - | - | - |
| 10% Debentures | ? | ? | - | - |
| TOTAL FUNDS AVAIABLE (A) | 1,60,000 | 2,00,000 | ? | ? |
| (B) APPLICATION OF FUNDS: | - | - | - | - |
| (a) Fixed Assets | 80,000 | ? | ? | +75% |
| (b) Working Capital: | - | - | - | - |
| (i) Current Assets: | - | - | - | - |
| Inventories | 50,000 | ? | (-) 10,000 | ? |
| Receivables | ? | 56,000 | (-) 40,000 | ? |
| Cash | ? | 24,000 | (-) 6,000 | ? |
| Total Current Assets | 1,40,000 | 1,20,000 | (-) 20,000 | ? |
| (ii) Current Liabilities | - | - | - | - |
| Creditors | ? | ? | - | - |
| Working Capital (i-ii) | 80,000 | 60,000 | ? | ? |
| APPLICATION OF FUNDS (B) (a+b) | 1,60,000 | 2,00,000 | ? | ? |
Q.7.
You are required to prepare cash flow statement as per AS-3 for the year ended 31-12-03 from following Balance Sheet as on 31st December and additional information of ATKT Ltd. (16)
| Liabilities | 2002Rs. | 2003Rs. | Assets | 2002 Rs. | 2003 Rs. |
| Share Capital | 5,00,000 | 7,50,000 | Building | 1,00,000 | 2,90,000 |
| Share Premium | 50,000 | 75,000 | Machinery | 90,000 | 2,70,000 |
| Profit & Loss A/c | -- | 13,000 | 10% Investment | 1,00,000 | 1,00,000 |
| 12% Debentures | 1,00,000 | 1,00,000 | Stock | 3,70,000 | 2,94,000 |
| Creditors | 80,000 | 50,000 | Debtors | 58,000 | 49,000 |
| Bank Overdraft | -- | 10,000 | Advance Tax | 5,000 | 60,000 |
| Tax provision | 6,000 | 68,000 | Cash | 5,000 | 6,000 |
| Bad Debts Provision | 4,000 | 6,000 | Bank Balance A/c | 6,000 | -- |
| O/s Debenture Interest | 6,000 | 3,000 | Profit & loss A/c | 7,000 | -- |
| - | - | - | Share Issue Expenses | 5,000 | -- |
| Total | 7,46,000 | 10,75,000 | Total | 7,46,000 | 10,75,000 |
Additional Information:
(1) Share issue expenses incurred in the year Rs. 2,500.
(2) Depreciation provided on Building Rs. 10,000 & Machinery Rs. 20,000
Q.8.
(a) State with reasons whether the following statements are True or False:(10)
(1) The term ‘Flow’ refers to the movement of funds between two Balance Sheets dates.
(2) Higher Stock to Working Capital Ratio is an indication of lower investment in stock.
(3) Cash Flow Statement is now mandatory.
(4) When closing stock is overvalued Gross Profit Ratio for that year increases.
(5) Current Ratio ignores the quality of Working Capital.
(b)Write short notes (any two):
(1) Seasonal working capital
(2) Common Size Financial Statements.
(3) Window Dressing of Current Ratio.
Q.9.
Complete the following Statement of changes in Working Capital:(16)
| Changes in Working Capital | ||||
|---|---|---|---|---|
| Particulars | 30-09-2003 (Rs.) | 30-09-2004 (Rs.) | Increase (Rs.) | Decrease (Rs.) |
| (A) CURRENT ASSETS | - | - | - | - |
| Stock in Trade | ? | ? | 3,90,000 | ? |
| Cash at Bank | 1,50,000 | ? | - | 50,000 |
| Total (A) | ? | ? | - | - |
| (B)CURRENT LIABILITIES | - | - | - | - |
| Sundry Creditors | ? | ? | - | ? |
| Bills Payable | 1,00,000 | ? | - | 50,000 |
| Total (B) | ? | ? | - | - |
| Working Capital (A-B) | ? | 4,00,000 | - | - |
| Increase in Working Capital | 1,00,000 | - | - | - |
| - | ? | ? | ? | ? |
Additional Information:
(1) Current Ratio of the company on 30th September, 2003 is 2:5:1 and on 30th September, 2004 it is 2:1.
(2) Liquid Ratio of the Co. on 30th September, 2004 is 1:5:1.
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