Page 1 of 5 ST. JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)
END SEMESTER EXAMINATIONS – MARCH / APRIL 2019 B.B.A.(CIMA) - II SEMESTER
M4 17 MC 203: FINANCIAL ACCOUNTING
Duration: 3 Hours Max. Marks: 70 SECTION - A
I) Answer any TEN questions. Each carries 1 mark. (10x1=10) 1. Mention any two business documents and its purpose.
2. Give an example for each of the following type of transactions:
a. Decrease in asset and decrease in Equity b. Decrease in asset and decrease in liabilities
3. Differentiate Rule based accounting and Principle based accounting.
4. Why do we need regulatory framework for accounting?
5. An entity purchased a property 15 years ago at a cost of $ 1,00,000 and have been depreciating it @ 2% per annum, on straight line basis. The entity have had the property professionally revalued at $ 5,00,000. What is revaluation surplus that will be recorded in the financial statements?
6. What is Imprest system of maintaining a petty cash book?
7. Define Depreciation.
8. An entity purchased a car for $60,000 and expected it to have a useful life of 5 years. It depreciates the car using 50% reducing balance and sells it after 3 years for $30,000.What was the profit on disposal?
9. What is an Audit Trail?
10. What is the role of IASB?
11. Give the journal entry for Accrued Income and Prepaid Income.
12. What do you mean by “ Internal Auditing “?
SECTION - B
II) Answer any THREE questions. Each carries 6 marks. (3x6=18) 13. You are a dealer in computers. The Balance sheet on the 1st day is as
follows:
Liabilities Amount $ Assets Amount $
Capital 20,00,000 Cash
Inventory
17,00,000 3,00,000 On the second day you purchased Computers (for sale), worth $ 2,00,000 for cash. On the third day, a Plant was purchased on credit $ 8,00,000. On the fourth day purchased stationary for $ 50,000 out of which $ 10,000 is yet to be paid. On the Fifth day, goods sold for cash $ 3,00,000 (cost $ 2,00,000) and Goods cost $ 5,000 taken by proprietor for his personal use. On the sixth day loan of $ 3,00,000 received from Indian Bank.
Required : Illustrate the effect of each of these transactions upon the accounting equation.
REG NO:
Page 2 of 5 14. You have been provided with the following information relating to
purchase costs and selling prices.
Transactions Amount $
(Gross )
Purchase of Machinery , sales tax at 25% 12,500
Sale of goods , sales tax at 20% 12,000
Advertisement costs , sales tax of 15% 350
Vehicle repair costs , sales tax of 8% 3,200
Purchase of raw materials , sales tax of 12% 4,800
Purchase of Plant , sales tax at 20% 1,62,000
Required: Calculate the net and sales tax amounts for each of the transactions noted above. What was the closing balance on the Sales tax ledger account based upon this information? In all cases, calculate your answers to the nearest cent.
15. Prepare Bank Reconciliation Statement as on 31st July (1) Balance as per Cash Book is $ 25,000 as on 31st July .
(2) Cheques for $ 15,000 were deposited into the Bank in the month of July but only cheques for $ 11,000 were credited by the bank till 31st July .
(3) Cheques issued for $ 13,000 in July, out of which a cheque for $ 3,800 was presented for payment on 3rd August.
(4) Bank charged $ 50 as Bank charges and credited interest of $ 370.
(5) A customer directly deposited $ 1,550 in firm’s bank A/c.
(6) Bank paid the Insurance Premium of $ 1,200 as per standing instructions.
16. Write a short note on Structure of IFRS Foundation.
17. A ledger keeper of Acharya & Co. could not agree the trial balance. He transferred an amount of $ 296 being excess of debit side total to Suspense account.
The following errors were subsequently discovered.
1. Sales book was overcast by $ 300.
2. Purchase of furniture worth $ 615 was passed through the Purchases book.
3. An amount of $ 55 received from M/s. Shah & Co. was posted to their account as $ 550.
4. Purchases Returns book total on a folio was carried forward as $ 221 instead of $ 112.
5. A cash sale of $ 1,435 though duly entered in the cash book was posted to Sales account as $ 235.
Pass necessary rectification entries and prepare the Suspense account in the books of Acharya & Co.
Page 3 of 5 SECTION - C
III) Answer any TWO questions. Each carries 15 marks. (2x15=30) 18. Give Journal entries for the following transactions and prepare personal
ledger accounts only in the books of a trader:
Debit balances on January 1 , 2018:
Cash in hand $ 8,000 , Cash at bank $ 25,000, Inventory $ 20,000, Building $ 10,000, Receivables : Vijay $ 2,000, Madhu $ 2,000
Credit balances on January 1,2018:
Payables : Anand $ 5,000, capital $ 62,000
Following were further transactions in the month of January, 2018:
Jan 1 - Purchased goods worth $ 5,000 for cash less 20% trade discount and 5% cash discount.
Jan 4 - Received $ 1,980 from Vijay as final settlement.
Jan 8 - Purchased plant from Mukesh for $ 5,000 and paid $ 100 as cartage for bringing the plant to the factory and another $ 200 as installation charges.
Jan 12 - Sold goods to Rahim on credit $ 600.
Jan 15 - Rahim became insolvent and could pay only 50 cents in a dollar.
Jan 18 - Sold goods to Ram for cash $1,000.
19. a. An entity Apple has the following balances at 1/1/2011.
Particulars Amount $
Share capital ( $ 1 nominal value ) 1,00,000
Share premium 50,000
Retained earnings 2,00,000
During the year Apple issued 50,000 shares at $ 1.20 and paid all shareholders a dividend of $ 0.10 per share. Building is revalued to $ 2,40,000 from $ 1,20,000.Profit after tax amounted to $ 1,20,000.
Prepare Statement of Changes in Equity for the year ending 31/12/2011.
(7 marks ) b.ABC had the following transactions during the first week of July 2012.
1 Jul – Bought goods on credit from JB cost $ 1,000 Sold goods on credit to JSA for $ 800
2 Jul – Sold goods on credit to PB for $ 80
Returned goods to JB because they were faulty $ 80 3 Jul – Bought goods on credit from AL cost $ 600
4 Jul – JSA returned unwanted goods $ 200 5 Jul – Returned goods to AL $ 120
6 Jul – Sold goods on credit to CAL for $ 400 7 Jul – CAL returned goods as unsuitable $ 120 Sold goods on credit to BC for $ 240
Required : Prepare the relevant Subsidiary books to record these
transactions. (8 marks ) 20. On examining the books of Exports Co. you ascertain that on 1 October
2018 the receivables ledger balances were $ 8,024 debit and $ 57 credit and the payables ledger balances on the same date $ 6,235 credit and $ 105 debit.
Page 4 of 5 For the year ended 30 September 2019 the following particulars are
available:
Particulars Amount $
Sales 63,728
Purchases 39,974
Cash from accounts receivable 55,212
Cash to accounts payable 37,307
Discount received 1,475
Discount allowed 2,328
Returns inwards 1,002
Returns outwards 535
Irrecoverable debts written off 326
Cash received in respect of debit balances in payables ledger
105 Amount due from customer as shown by receivables
ledger, offset against amount due to the same firm as shown by payables ledger ( settlement by contra )
434
Allowances to customers on goods damaged in transit 212 On 30 September 2019 there were no credit balances in the receivables ledger except those outstanding on 1 October 2018, and no debit balances in the payables ledger.
You are required to write up the following accounts recording the above transactions bringing down the balances as on 30 September 2019:
(a) Receivables ( Sales ) control account (b) Payables ( Purchases ) control account 21. A). INV entered into the following transactions:
Mar 1 Beginning Inventory 60 units @ $ 15.00 per unit
5 Purchase 140 units @ $ 15.50 per unit
14 Sale 190 units @ $ 16.00 per unit
27 Purchase 70 units @ $ 19.50 per unit
29 Sale 30 units @ $ 19.50 per unit
Required: (a) Calculate the value of the closing inventory at the end of the first week of trading using the following inventory valuation methods:
(1) FIFO (2) Periodic weighted average cost (3) Continuous weighted average cost
b) Determine gross profit for the first week of trading using each method of inventory valuation. (10 marks ) B) An employee worked forty hours in week 25. The employee is paid at the standard rate of $20 per hour for the first 35 hours, and any additional hours are paid at standard rate plus 20%. The employee is liable to pay income tax on total earnings at the rate of 30% on gross earnings. Both the employee and employer are obliged to pay social security tax at the rate of 15% on gross earnings. In addition, the employee contributed $50 per week to a savings scheme which was deducted from his earnings by his employer.
Page 5 of 5 Required:
i. What was the net cash payment made to the employee for week 25?
ii. What was the total amount payable to the tax authority for income tax and social security tax?
iii. Give journal entries for above. ( 5 marks ) SECTION - D
IV) Case Study – Compulsory question. (1x12=12) 22. NBV provided you with the following information as at 31 July 2017:
Particulars Amount $
Inventory at 1 August 2016:
Raw materials 22,000
Work in progress 4,000
Finished goods 63,000
Inventory at 31 July 2017:
Raw materials 25,000
Work in progress 1,000
Finished goods 72,000
Purchases of raw materials 2,20,000
Direct wages 3,00,000
Royalties payable 45,000
Production overheads 3,60,000
Distribution costs 70,000
Administration expenses 2,90,000
Sales 14,00,000
Returns inwards 5,000
Direct factory fuel and power 10,000
Salary for supervisors 7,000
a. Accruals are estimated as - Direct wages - $ 10,000, Salary to supervisors - $ 4,000
b. Bad debts incurred $ 5000 which is to be charged to Administration expenses.
c. Prepaid Factory fuel and power $ 2,000
d. Depreciation on motor vehicles is to be calculated @ 25% per annum using reducing balance method. (used for sales and distribution) Cost of motor vehicle: $49,400, accumulated depreciation: $21,240.
Required :
a. Prepare the manufacturing account of NBV for the year ended 31st July 2017
b. Prepare the Statement of Profit or loss of NBV for the year ended 31st July 2017
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