Httpsmanagement - Ind.inforumattachmentsf225408d1451274756 Accounting 1 Ca Inter Ipc Group I Accounting Exam Answer Key PDF
Httpsmanagement - Ind.inforumattachmentsf225408d1451274756 Accounting 1 Ca Inter Ipc Group I Accounting Exam Answer Key PDF
Note: All Page References given are from Padhuka’s Ready Referencer on Accounting – For CA Inter (IPC)
2. Conclusion: The Company should not recognize the entire Interest Receivable. It should be recognized only on cash
basis, i.e. as and when received.
The Company decides to change from FIFO Method to Weighted Average Method for ascertaining the Cost of Inventory from
the year 2014–15. On the basis of Weighted Average Method, Closing Inventory as on 31st March 2015 amounts to ` 1,47,000.
Realisable Value of the Inventory as on 31st March 2015 amounts to ` 1,95,000.
2. Analysis and Conclusion: Due to the change in valuation of Inventory from FIFO to Weighted Average Method, the
Inventory has been valued at ` 1,47,000, which is lower by ` 16,000 than the old method (` 1,63,000) . Consequently,
the Profit is lower by ` 16,000. Hence the change in Accounting Policy should be disclosed in Notes to Accounts.
Nov 2015.1
Gurukripa’s Guideline Answers for Nov 2015 CA Inter (IPC) Group I Accounting
Particulars `
Original Cost of the Machinery 1,50,000
1,50,000 10% Salvage Value
Less: Depreciation for Year 1 to 3 on SLM Basis = × 3 Years (67,500)
6 years
Book Value at the Beginning of Year 4 82,500
82,500 (1,50,000 5%)
Depreciation for 4th Year = 18,750
4 years
Comment: Change in the method of Depreciation is always applied with retrospective effect.
However, when there is only a revision of the Estimated Useful Life of the Asset, the Unamortised Depreciable Amount
should be charged over the revised remaining Useful Life. Hence, the treatment given by the Accountant by re–calculating
the Revised Depreciation historically and charging the difference to P&L A/c is not proper.
Nov 2015.2
Gurukripa’s Guideline Answers for Nov 2015 CA Inter (IPC) Group I Accounting
(2) The Preference Shareholders agreed that their ` 10 Shares should be reduced to ` 8 by cancellation of ` 2 per Share. They
also agreed to subscribe for two new Equity Shares of ` 10 each for every five Preference Shares held.
(3) The Taxation Liability of the Company is settled at ` 66,000 and the same is paid immediately.
(4) One of the Trade Creditors of the Company to whom the Company owes ` 1,00,000 decides to forego 30% of his claim. He
is allotted Equity Shares of ` 10 each in full satisfaction of his balance claim.
(5) Other Trade Creditors of ` 5,00,000 are given option of either to accept fully paid 9% Preference Shares of ` 8 each for the
amount due to them or to accept 80% of the amount due to them in cash in full settlement of their claim. Trade Creditors
for ` 3,50,000 accepted Preference Shares option and rest of them opted for cash towards full settlement of their claim.
(6) Company’s Contractual Commitments amounting to ` 6,50,000 have been settled by paying 4% Penalty of Contract Value.
(7) Debentureholders having charge on Plant and Machinery accepted Plant and Machinery in full settlement of their dues.
(8) The Rate of Interest on 8% Debentures is increased to 10%. The Debentureholders surrender their existing Debentures of `
50 each and agreed to accept 10% Debentures of ` 80 each for every two Debentures held by them.
(9) The Land and Building to be depreciated by 5%.
(10) The Debit Balance of Profit and Loss Account is to be eliminated.
(11) 1/4th of Trade Receivables and 1/5th of Inventory to be written off.
Pass Journal Entries and prepare Balance Sheet after completion of the Reconstruction Scheme in the books of Clean Ltd as
per Schedule III to the Companies Act, 2013.
Solution: Similar to Page No.A.10.11, Q.No.8 – N 09 Qn
Nov 2015.3
Gurukripa’s Guideline Answers for Nov 2015 CA Inter (IPC) Group I Accounting
2. Reconstruction A/c
Particulars ` Particulars `
To Cash / Bank A/c (Penalty on Contract) 26,000 By Equity Share Capital A/c 7,20,000
To Land and Building A/c 3,75,000 By 9% Preference Share Capital A/c 6,40,000
To Profit and Loss A/c (Debit balance) 2,15,000 By Trade Creditors A/c (30,000 + 30,000) 60,000
To Trade Receivables 4,50,000 By 7% Debentures A/c 1,00,000
To Inventories 1,90,000 By 8% Debentures A/c 3,40,000
To Capital Reserve (balancing figure) 6,13,000 By Provision for Tax A/c 9,000
Total 18,69,000 Total 18,69,000
Nov 2015.4
Gurukripa’s Guideline Answers for Nov 2015 CA Inter (IPC) Group I Accounting
Nov 2015.5
Gurukripa’s Guideline Answers for Nov 2015 CA Inter (IPC) Group I Accounting
Solution: Cash Flow Statement for the year ended 31st March 2015 (Direct Method)
Particulars `I `I
A. CASH FLOW FROM OPERATING ACTIVITIES:
Gross Profit Amount 3,82,500
Cash Receipts from Sale of Goods (Sales = = ) 12,75,000
Gross Profit Rate 30%
Cash Payments to Suppliers of Goods ( 4,60,000)
Cash Payments to & on behalf of Employees (Wages) (4,92,500)
Cash Payments for Expenses / Services (Administration and Selling Expenses) (75,000)
Cash Generated from Operations before Taxes & Extra Ordinary Items 2,47,500
Less: Taxes Paid (65,000)
Net Cash Flow from / (used in) Operating Activities [A] 1,82,500
B. CASH FLOW FROM INVESTING ACTIVITIES:
Sale Proceeds of Investments (Book Value 7,00,000 + Profit 20,000) 7,20,000
Purchase of New Plant & Machinery (2,50,000)
Net Cash Flow from / (used in) Investing Activities [B] 4,70,000
C. CASH FLOW FROM FINANCING ACTIVITIES:
Repayment of Bank Loan Principal (2,15,000 – 15,000) (2,00,000)
Interest on Bank Loan (15,000)
Dividends paid (inclusive of Dividend Distribution Tax) (30,000)
Net Cash Flow from / (used in) Financing Activities [C] (2,45,000)
D. Net Increase or Decrease in Cash or Cash Equivalents [A + B + C] 4,07,500
E. Opening Balance of Cash & Cash Equivalents (given) 2,00,000
F. Closing Balance of Cash & Cash Equivalents (given) 6,07,500
Note: Change in Inventory & Trade payments are not relevant for above Direct Method.
1. Computation of Average Due Date for Mr. Yash(Note: Base Date = 1st May)
Due Date No. of Days from Base Date Amount (`) Product (`)
Col. (1) Col. (2) Col. (3) Col. (4) = (2) × (3)
1st May 2014 0 75,000 0
th
30 June 2014 30+30=60 20,000 12,00,000
st
31 March 2015 30+30+31+31+30+31+30+31+31+28+31=334 15,000 50,10,000
Total 1,10,000 62,10,000
Total of Products 62,10,000
Average Due Date = Base Date ± = 1st May + = 1st May + 57 days (approx.) = 27th June
Total of Amounts 1,10,000
Nov 2015.6
Gurukripa’s Guideline Answers for Nov 2015 CA Inter (IPC) Group I Accounting
2. Computation of Average Due Date for Mr. Harsh (Note: Base Date = 1st May)
Due Date No. of Days from Base Date Amount (`) Product (`)
Col. (1) Col. (2) Col. (3) Col. (4) = (2) × (3)
14th August 2014 30+30+31+14 =105 60,000 63,30,000
31st December 2014 30+30+31+31+30+31+30+31 = 244 50,000 1,22,00,000
4th March 2015 30+30+31+31+30+31+30+31+31+28+4 = 307 75,000 2,30,25,000
Total 1,85,000 4,15,55,000
Total of Products 4,15,55,00 0 st
Average Due Date = Base Date ± = 1st May + 1 May + 225 days (approx.) = 12th Dec
Total of Amounts 1,85,000
3. Calculation of Interest
Partner Days from ADD to Period End Interest
Yash th st
27 June 2014 to 31 March 2015 277
` 1,10,000 × 10% × = ` 8,348
= 3+31+31+30+31+30+31+31+28+31= 277 days 365
Harsh 12th Dec 2014 to 31st March 2015 109
` 1,85,000 × 10% × = ` 5,525
= 19+31+28+31 = 109 days 365
Particulars ` Particulars `
To Salaries 1,20,000 By Gross Profit 6,00,000
To Rent Rates & Taxes 80,000
To Commission on Sales 21,000
Nov 2015.7
Gurukripa’s Guideline Answers for Nov 2015 CA Inter (IPC) Group I Accounting
Particulars ` Particulars `
To Depreciation 25,000
To Interest on Debentures 32,000
To Directors Fees 12,000
To Advertisement 36,000
To Net Profit for the Year 2,74,000
Total 6,00,000 Total 6,00,000
(i) SALE Ltd initiated an Advertising Campaign which resulted increase in monthly average sales by 25% post– incorporation.
(ii) The Gross Profit Ratio post incorporated increased to 30% from 25%.
You are required to apportion the profit for the year between Pre–Incorporation and Post–Incorporation periods. Also explain
how Pre–Incorporation Profit is treated in the accounts.
1. Computation of Ratios
Particulars Pre – Incorporation Post – Incorporation Total
(a) No. of Months 1stApr to 31st Jul = 4 Months 1st Aug to 31st Mar = 8 Months 4:8=1:2
(b) Sales Ratio Sales = 100 × 4 Months =400 Sales =125 × 8 Months =1000 400 : 1000= 2:5
(c) GP on Sales 25% 30%
(d) Ratio of GP (Pre:Post) (b × c) 400 × 25% = 100 1000 × 30% = 300 100:300 = 1:3
2.Statement showing computation of Profit / Loss for Pre and Post Incorporation Periods (`)
Particulars Ratio Pre Incorpn. Post Incorpn.
A. Gross Profit (as per Note 1) 1:3 1,50,000 4,50,000
B. Apportionment of Expenses
Salaries 1:2 40,000 80,000
Rent, Rates & Taxes 1:2 26,667 53,333
Commission on Sales 2:5 6,000 15,000
Depreciation 1:2 8,333 16,667
Debenture Interest (issued after the Company is formed) Nil 32,000
Directors Fee (Paid by the Company only after incorporation) Nil 12,000
Advertisement Expenses(initiated post–incorporation) Nil 36,000
Total Expenses 81,000 2,45,000
C. Profit (A – B) 69,000 2,05,000
3. Treatment: Pre–Incorporation Profits are transferred to “Capital Reserve”, (i.e. capitalized), and may be used for –
(a) Writing off Goodwill on Acquisition, if any.
(b) Writing off Preliminary Expenses,
(c) Writing down Overvalued Assets, if any, etc.
Nov 2015.8
Gurukripa’s Guideline Answers for Nov 2015 CA Inter (IPC) Group I Accounting
On 1st April 2014, Ms. Naina retired. On her retirement, Goodwill is valued at ` 1,80,000. Ms.Radha and Ms. Khushi do not wish
to raise Goodwill account in the Books.
Ms. Naina drew her balance of Current Account 2nd April 2014, and it is agreed to pay balance of her Capital Account over a
period of two years by half yearly instalments with interest at 10% per annum.
On 1st October 2014, Ms.Asmita (Daughter of Ms.Radha) was admitted as a Partner. Ms. Radha surrendered one third of her
share of Profit and Loss in favour of Ms.Asmita and also transferred one–third of her Capital to Ms. Asmita. Ms. Asmita was
Manager in the Firm with Annual Salary of ` 16,000, prior to admission as Partner.
The other Bank Transactions during the financial year 2014–2015 were as follows:
1. Payment to Creditors 7,75,000
2. Received from Debtors 11,25,000
3. Expenses Paid 11,250
4. Asmita’s Salary Paid 8,000
5. Partner’s Drawings: Ms. Radha 50,000
Ms. Khushi 41,250
Ms. Asmita 11,250
6. First instalment with interest paid to Ms. Naina on 1st October 2014.
7. Plant & Machinery sold at ` 9,000 on 3rd April 2014 (Cost ` 10,000 & Book Value ` 7,000)
8. Balances as on 31st March 2015: Debtors ` 1,50,000, Creditors for Purchases ` 1,25,000, Creditors for Expenses ` 10,000
and Stock ` 1,71,250.
9. Depreciation is to be written off on Plant & Machinery ` 30,350.
10. Second instalment with interest paid to Ms. Naina on 1st April 2015.
Solution: Similar to Principles in Page A.6.42, Q.No.32 – M 98 Qn, and Page A.3.34, Q.No.26 – N 07 Qn
3,00,000
Note: Instalments in half years over 2 years = 4 instalments. So, Amount = = ` 75,000 per instalment.
4
Nov 2015.9
Gurukripa’s Guideline Answers for Nov 2015 CA Inter (IPC) Group I Accounting
Nov 2015.10
Gurukripa’s Guideline Answers for Nov 2015 CA Inter (IPC) Group I Accounting
3. Debtors A/c
Particulars ` Particulars `
To balance b/d 1,30,500 By Bank A/c 11,25,000
To Sales (Balancing Figure) 11,44,500 By balance c/d 1,50,000
Total 12,75,000 Total 12,75,000
4. Creditors A/c
Particulars ` Particulars `
To Bank 7,75,000 By balance b/d 1,03,750
To balance c/d 1,25,000 By Purchases (Balancing Figure) 7,96,250
Total 9,00,000 Total 9,00,000
Question 6(a): Not for Profit Organisations – Subscription, Sports Material Expense 6 Marks
The following information of TT Club are related for the year ended 31st March 2015.
1.
Balances As on 01.04.2014 (`) As on 31.03.2015(`)
Stock of Sports Material 75,000 1,12,500
Amount due for Sports Material 67,500 97,500
Subscription due 11,250 16,500
Subscription Received in Advance 9,000 5,250
2. Subscription received during the year ` 3,75,000
3. Payments for Sports Material during the year ` 2,25,000
You are required to – (a) ascertain the amount of Subscription and Sports Material that will appear in Income & Expenditure
Account for the year ended 31.03.2015, and (b) also show how these items would appear in the Balance Sheet as on 31.03.2015.
Nov 2015.11
Gurukripa’s Guideline Answers for Nov 2015 CA Inter (IPC) Group I Accounting
Solution: Refer Procedures in Page A.4.3, A.4.5 Q.No.6 Subscription Income & Consumption Items
1. Subscription A / c
Particulars ` Particulars `
To balance b/d – (Subscriptions Receivable at the By balance b/d – (Subscriptions Received in
11,250 9,000
year beginning) Advance at year beginning)
To Income and Expenditure A/c – Subscription By Cash / Bank – Subscriptions Received as
3,84,000 3,75,000
Income Recognised during the year (Bal.Fig.) per Receipts & Payments A/c
To balance c/d – (Subscriptions Received in By balance c/d – (Subscriptions Receivable
5,250 16,500
Advance at year end) at year end)
Total 4,00,500 Total 4,00,500
Working Notes
Particulars Computation Result
1. Cost of Purchases (5,000 × ` 105) Add 2%Brokerage ` 5,35,500
2. Dividend Received 5,000 × ` 100 × 2% ` 10,000
Nov 2015.12
Gurukripa’s Guideline Answers for Nov 2015 CA Inter (IPC) Group I Accounting
31/12/14 To P&L– Prft (WN 8) 21,660 31/03/15 By balance c/d 3,250 2,79,110
Total 6,250 5,68,410 Total 6,250 5,68,410
Nov 2015.13
Gurukripa’s Guideline Answers for Nov 2015 CA Inter (IPC) Group I Accounting
2. Equity Shareholders: Shareholders holding not less than 90% of the Face Value of the Equity Shares of the
Transferor Company, (other than the Equity Shares already held therein, immediately before the amalgamation, by the
Transferee Company or its Subsidiaries or their Nominees) become Equity Shareholders of the Transferee Company by
virtue of the amalgamation.
3. Consideration to Equity Shareholders = Equity Shares: The consideration for the amalgamation receivable by
those Equity Shareholders of the Transferor Company who agree to become Equity Shareholders of the Transferee
Company, is discharged by the Transferee Company wholly by the issue of Equity Shares in the Transferee Company,
except that cash may be paid in respect of any fractional Shares.
4. Continuity of business: The business of the Transferor Company is intended to be carried on, after the
amalgamation, by the Transferee Company.
5. Book Values of Assets and Liabilities: No adjustment is intended to be made to the Book Values of the Assets and
Liabilities of the Transferor Company, when they are incorporated in the Financial Statements of the Transferee
Company, except to ensure uniformity of accounting policies.
12 Mths 12 Mths
1. Credit Sales = Debtors × = ` 1,25,000 × = ` 10,00,000 = 80% of Total Sales.
1.5 Mths 1.5 Mths
100% 100%
2. Total Sales = Credit Sales × = ` 10,00,000 × = ` 12,50,000
80% 80%
Nov 2015.14
Gurukripa’s Guideline Answers for Nov 2015 CA Inter (IPC) Group I Accounting
Solution: Disadvantages of using ERP for Accounting – Refer Page A.1.9, Q.No.9 – N 09 Qn
1. Lack of Flexibility: User may have to modify their business procedure at times, to effectively use the ERP.
2. Implementation Hurdles: Many Consultants implementing the ERP Package are not able to fully appreciate the
business procedure, which affects the objective implementation of the ERP Packages.
3. Expensive: ERP Packages are priced very high and are often beyond the reach of small Firms.
4. Complex Software: ERP Package has large number of options to choose from. Further the parameter settings and
configuration makes it a little complex for the common users.
Nov 2015.15
Gurukripa’s Guideline Answers for Nov 2015 CA Inter (IPC) Group I Accounting
STUDENTS’ NOTES
Nov 2015.16