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Third Year B.Com. Examination, April/May 2012

(SIM Scheme)
FINANCIAL ACCOUNTING III

C 311

*C311*

Time : 3 Hours

Max. Marks : 90

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PART A

Answer any three questions. Each question carries 15 marks.

(315=45)

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1. From the following Trial Balance of Laxmi Bank Ltd., prepare Balance Sheet as
on 31-3-2012. It has an authorised capital of ` 20,00,000 divided into shares of
Rs. 100 each.
Credit

10,00,000

35,00,000

75,00,000

Profit and loss a/c (as on 1-4-2011)

1,00,000

Profit for the current year (before appropriations)

3,25,000

Money at call and short notice

45,00,000

Cash in hand

10,00,000

Cash with RBI

20,00,000

Cash with SBI

20,00,000

Statutory reserve

15,00,000

Investment fluctuation fund

50,000

Current account

70,00,000

Savings account

1,10,00,000

Fixed deposits account

1,00,00,000

5,00,000

Share capital (paid up)

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Investments

Debit

Bills discounted

Bills purchased

P.T.O.

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C 311

*C311*

-2-

5,00,000
50,00,000

Cash credit

50,00,000

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Loans and advances

Bank overdraft

Rebate on bills discounted

Loans from other banks

5,000

20,000

4,00,000

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Telegraphic transfer payable

Bank draft payable

6,00,000

5,00,000

3,20,00,000

3,20,00,000

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Bank premises

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Other information :

a) Advances on behalf of customers ` 25,00,000

b) Liability on bills rediscounted ` 2,50,000

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c) Directors proposed dividend on paid up capital @ 15%

d) Bills for collection Rs. 50,000.

2. Bharat Publishers took the publication of Geography book at a royalty of 20%

payable to the authors on the books sold with the minimum annual payment of
` 5,000. Accounts are to be settled on 31st December each year.

The agreement provided that if in any year the royalty calculated does not reach
the minimum rent of ` 5,000, it can be recouped in the next two years.

The number of books sold was as under :

2007 800 copies @ ` 20 each
2008 1000 copies @ ` 20 each

2009 1600 copies @ ` 20 each

2010 2000 copies @ ` 20 each
Pass the journal entries in the books of Bharat Publishers.

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*C311*

C 311

-3-

Credit (`)

6,00,000

4,00,000

2,00,000

21,00,000

3,00,000

3,00,000

60,000

1,00,000

3,20,000

4,50,000

35,000

16,000

28,000

4,000

90,000

30,000

4,000

150

Surrenders

32,000

Bonus in cash

13,000

Bonus in reduction of premium

4,500

Stamp on hand

1,000

1,10,000

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Debit (`)
Share Capital (in shares of ` 50 each)
Free hold property

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House property

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Life assurance fund (1-4-2011)

Loans on company policies
Claims by death

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Premium

Claims by maturity

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Leasehold property

Loans on mortgages
Commission

Consideration for annuities granted

Management expenses
Income tax on profits

Interest, dividend and rents

Annuities

3. The following are the balances extracted from the books of New Life Insurance
Co. Ltd. as on 31-3-2012. Prepare Revenue Account and Balance Sheet.

Dividends paid
Fine

Claims outstanding on 1-4-2011

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C 311

*C311*

-4-

5,000

Debenture stock

25,000

30,000

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Annuities due but not paid

Premiums outstanding on 1-4-2011

Investments
Furnitures

30,000

25,000

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S. Creditors

12,00,000

Cash at bank

39,650

33,16,150

33,16,150

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Cash in hand

80,000

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Adjustments :

a) Claims covered under reinsurance ` 20,000

b) Management expenses due ` 2,500

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c) Further bonus utilised in reduction of premium ` 2,000

d) Re-insurance premium ` 8,000

e) Claims o/s on 31-3-2012 ` 18,000

f) Surrender values adjusted against loan on company policies ` 7,000.

4. The books of SAFE General Insurance Co. gives the following particulars in
respect of Marine Insurance as on 31-3-2012. Prepare Marine Revenue Account
for the year ended 31-3-2012.
`

Claims outstanding on 1-4-2011

3,000

Claims outstanding on 31-3-2012

7,500

Provision for unexpired risk on 1-4-2011

95,000

Claims paid

1,20,000

Premiums

3,00,000

Reinsurance recoveries
Additional reserve on 1-4-2011

8,000
60,000

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*C311*

C 311

Management expenses

70,000

Re-insurance premium paid

30,000
800

Interest and dividend

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Commission on re-insurance accepted

-5-

25,000
1,300

Commission on re-insurance ceded

1,600

Legal expenses

2,500

Premium o/s on 1-4-2011

3,000

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Income tax on interest and dividend

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5. A head office in Bangalore has a branch in Mysore to which goods are invoiced
by the head office at cost plus 25% . All cash received by the branch is remitted
to head office. All expenses are paid from Bangalore. From the following particulars,
show how the branch account will appear in the books of the head office.
`

Stock on 1st July 2011 (at invoice price)

12,500

Debtors on 1st July 2011

12,000

Goods invoiced from Bangalore

40,000

Remittances to Bangalore :

16,000

Cash received from Drs.

29,500

Cash sales

Goods returned to head office

45,500
2,400

Cheques received from Bangalore :

For wages and salaries
For rent and rates
For sundry expenses

11,000
3,000
500

14,500

Stock on 31st Dec. 2011 (at invoice price)

15,000

Debtors on 31st Dec. 2011

22,500

Liability for petty expenses

420

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C 311

*C311*

-6-

PART B

(310=30)

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Answer any three questions. Each question carries 10 marks.

6. A company has two departments A and B. Department A sells goods to

department B at normal market price. From the following particulars, prepare a
Departmental Trading and Profit and Loss Account for the year ended 31 March 2012.
B Dept.

General

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A Dept.

Expenses

2,50,000

40,000

40,000

15,000

20,000

7,000

5,000

80,000

20,000

2,60,000

1,45,000

2,500

1,500

Machinery

15,000

Advertisements

12,000

Salaries (general)

18,000

Goods from A dept.

Wages

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Salaries (departmental)

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Purchases

15,000

Opening stock

Closing stock at cost

Sales

Printing and stationary

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Depreciate Machinery by 10%. The general unallocated expenses are to be

apportioned in the ratio of 2 : 1 to departments A and B.

7. On 1st Jan. 2009, a company purchased a goods carrier on the instalment system.
The cash price of the carrier was ` 59,600 and the payment was to be made as
follows :
` 16,000 was to be paid on agreement and the balance in 3 instalments of
` 16,000 each at the end of each year. 5% interest p.a. is charged by vendor. The
buyers have decided to write off 10% annually on the diminishing value method.
Prepare necessary ledger accounts in the books of the Co.

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*C311*

C 311

-7-

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8. On 1-4-2008, the Hazarika Limited purchased one machine from M/s Arora Brothers
on Hire purchase system. ` 40,000 was paid on signing the agreement. Subsequently
three instalments of ` 43,500, ` 39,000 and ` 34,500 were paid at the end of each
year. The cash price of the machine was ` 1,50,000. Prepare necessary ledger
accounts in the books of Hazarika Limited.
9. Distinguish between Life Insurance and General Insurance.

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10. A fire occurred on 15th December 2011 in the premises of Fine Furnitures Ltd.
From the following information, calculate the amount of claim to be lodged with
the insurance company for loss of stock :
`
Stock at cost on 1-4-2010
20,00,000
Stock at cost on 1-4-2011
30,00,000
Purchases for the year ended 31-3-2011
40,00,000
Purchases from 1-4-2011 to 15-12-2011
88,00,000
Sales for the year ended 31-3-2011
60,00,000
Sales from 1-4-2011 to 15-12-2011
1,05,00,000
Salvage value of stock after fire was ` 2,00,000. The policy was for 55,00,000
and was subject to the average clause.
PART C

Answer any three questions. Each question carries 5 marks.

(35=15)

11. Write a note on Rebate on bills discounted.

12. Mention the characteristics of independent branches.

13. State the basis of apportionment of the following expenses in departmental

accounts
a) Discount received
b) Canteen expenses
c) Rent and rates
d) Depreciation
e) Salaries.
14. Write a note on Reserve for unexpired risk.
15. Distinguish between commission on re-insurance accepted and commission on
re-insurance ceded.

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C 311

*C311*

-8-

W G

W W E. W 15 APW.

(315=45)

D PX Q$ P () qr 31&3&2012 B g qr
. A . 100 , . 20,00,000 W AP v .

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1.

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Pv B

10,00,000

35,00,000

75,00,000

&r T (1&4&2011 )

1,00,000

(O )

3,25,000

PW A W

45,00,000

P W

10,00,000

RBI W

20,00,000

SBI W

20,00,000

15,00,000

wPW HW

50,000

a T

70,00,000

E T

1,10,00,000

s~ T

1,00,00,000

5,00,000

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wWv wW

wPW

ik

v ( )

ib

Sa

Pv wW

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*C311*

C 311
5,00,000

W WvW

50,00,000

50,00,000

C PW v

P pWP WOW

4,00,000

5,00,000

3,20,00,000

3,20,00,000

C :

20,000

6,00,000

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P B|

5,000

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P P vrW

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wWv wW p

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-9-

a) WP X WvW . 25,00,000

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b) &wWv wW g . 2,50,000
c) v P . 15 r

vP

d) WP wW . 50,000.

W P | , SPW PW o
. 20 r g wP, Pu P . 5,000 W v. 31
w PRW CW.

2.

PR Q g Pu wW . 5,000 A
Gv W vPX.
PW o D PX :

2007

& 800 W . 20PR J

2008

& 1000 W . 20PR J

2009 & 1600 W .20PR

2010 & 2000 W . 20PR

P g S .

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C 311

*C311*

-10-

B T B g qr .

v (. 50 W )

4,00,000

2,00,000

6,00,000

21,00,000

3,00,000

3,00,000

60,000

1,00,000

3,20,000

4,50,000

35,000

16,000

28,000

4,000

90,000

30,000

4,000

150

32,000

P W W

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i B (1&4&2011)

A X (PW) PPW

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(PW) PPW

g W P

Bv acW

W B W

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P B

g.
co

Sa

wx , wW
W

A| w W

3. 31&3&2012 C
P () P
D PX RW v
X.

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*C311*

C 311

4,500
P X ~P
P rW
1,000
1&4&2011 Q PPW

5,000
1&4&2011 Q W
W Q W

wPW
12,00,000
sP|W
30,000
W

80,000
Q W
P W
39,650

g.
co

13,000

1,10,000

25,000

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ib

30,000

ik

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33,16,150

-11-

25,000

33,16,150

~PW :
a) vX PPW . 20,000
b) Q Bv acW . 2,500
c) acX PwPR EX . 2,000
d) . 8,000
e) 31&3&2012 Q PPW . 18,000
f) P W PR ~P vor A| w W
. 7,000.

4. 31&3&2012 "Pv 'W SAFE

P PW D
PX W vX. Pv B T 31&3&2012 PR w.
`

1&4&2011 Q PPW

3,000

31&3&2012 Q PPW

7,500

1&4&2011 AW WvW

95,000

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*C311*

-12-

1,20,000

3,00,000

g.
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w PPW
W

8,000

60,000

Bv acW

70,000

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1&4&2011 ac

JPv

1,300

vor

1,600

P acW

2,500

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wx B W

1&4&2011 Q

3,000

W S Pd J T . APR
. 25 r PW S Pd . T v P | A
S PdW . G acW W Pd W. D PX
W S Pd P T T .
`

1 g 2011 ( )

12,500

1 g 2011 M~W

12,000

W or PW

40,000

800

25,000

ik

wx

30,000

ib

5.

C 311

WW or :
W o

16,000

M~W v W

29,500

S PdW X P

45,500
2,400

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*C311*

C 311

-13-

wW PWWX

11,000
3,000

C acWWX

14,500

500

P ( )

15,000

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31 w 2011

g.
co

P PRX

W v aPRW :

31 w 2011 M~W

22,500

C acWWX W

ib

420

ik

W W E. W 10 APW.

J P "A' "B' G Gv WW . " A' W "B' WPR

P p r W P o v . D P X W ,
31 a 2012 PR AWv X T r T .

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6.

A W

P P
SW

(310=30)

"A' W v P
P
W (WWW )
A ( )
o

B W

acW

15,000

2,50,000

40,000

40,000

15,000

20,000

7,000

5,000

80,000

20,000

2,60,000

1,45,000

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C 311

*C311*

-14-

1,500

P|

15,000

W ( )

2,500

g.
co

| S X

12,000

18,000

lo

P|W . 10 r P W. aW acW "A'

"B' WWW 2 : 1 | b.

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7. 1 g 2009 J P P B J P W~P

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S. P W~P W . 59 ,600 C , A | D
PX . . 16,000 W J
W v Q . 16,000 W
PW . P . 5 r wx oW
. SW P . 10 r C P B W
P . P P AP TW .

8. 1&4& 2008

hP "wW S ' J
>> A S. J QW . 40,000 W
. P PW . 43 ,500 , . 39 ,000
. 34,500 . W . 1,50,000 C. hP
P A TW .
i v W .

9.

a () B| P 15 w 2011 J AX A
v. D PX W PW P P r PP PR Q.

10.

1&4&2010

20,00,000

1&4&2011

30,00,000

31&3&2011 PR SW

40,00,000

SW
1&4&2011 15&12&2011 X

88,00,000

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C 311

-15-

60,00,000

1&4&2011 15&12&2011 X
o

1,05,00,000

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co

31&3&2011 PR o

*C311*

AX A E Q . 2,00,000 . 55,00,000 WX
PW A.

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WW E. W 5 APW.

(35=15)

D PX acW a BW :

a) v w

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b) Pq acW

13. X PRW

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12. TW W|P|W .

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11. "wWv wW ' WY q~ .

c) wW PW
d) P

e) W.

14. "AW WvWWX ' q~ .

15. "JPv ' "w ' v

W .

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