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NARSEE MONJEE INSTITUTE OF MANAGEMENT STUDIES

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					                 NARSEE MONJEE INSTITUTE OF MANAGEMENT STUDIES
                             (DEEMED UNIVERSITY)

                 DISTANCE LEARNING PROGRAMMES IN MANAGEMENT

                                  MAY 2005 EXAMINATION

                               ACCOUNTING PROCEDURES

                                           ADBM

DATE : 9 / 5 / 2005                               TOTAL M ARKS : 100

TIME : 2 PM TO 5 PM

Notes:
1.    Attempt any four of the following questions.
2.    All questions are of 25 marks each
3.    Give working Notes to support your answer. You may make assumptions
      wherever required:

Problem 1 Journalise the following transactions. Also state the nature of each account
involved i n the Journal entry.

1    Dec.1, 1998, Ajit started business with Cash Rs. 40,000.
1    Dec. 3, he paid into the Bank Rs. 2,000.
1    Dec. 5, he purchased goods for cash Rs. 15,000.
2    Dec. 8, he sold goods for cash Rs. 6,000.
3    Dec. 10, he purchased furniture and paid by cheque Rs. 5,000.
4    Dec. 12, he sold goods to Arvind Rs. 4,000.
5    Dec. 14, he purchased goods from Amrit Rs. 10,000.
6    Dec. 15, he returned goods to Amrit Rs. 5,000.
7    Dec. 16, he received from Arvind Rs. 3,960 in full settlement.
8    Dec. 20, he withdrew cash from business for personal use Rs. 2,000
9    Dec. 24, he paid telephone charges Rs. 1,000.
10   Dec. 26, cash paid to Amrit in full settlement Rs. 4,000.
11   Dec. 31, paid for stationery Rs.200, rent Rs.500 and salaries to staff Rs. 2,000.
12   Dec.31, goods distributed by way of free samples Rs. 1,000.

Problem 2
Journalise the following transactions, post them in the Ledger and balance the
accounts on 31st January.

Jan

1      Ram started business with a capital of Rs. 10,000.
5      He purchased goods from Mohan on credit Rs. 2,000.
8      He paid cash to Mohan Ras.1, 000.
10     He sold goods to Suresh Rs. 2,000
12   He received cash from Suresh Rs. 3,000.
16   He further purchased goods from Mohan Rs. 2,000.
20   He paid cash to Mohan Rs. 1,000.
23   He further sold goods to Suresh Rs. 2,000.
28   He received cash from Suresh Rs. 1,000.

Problem 3

(a) State with reasons which of the following items are of capital nature or revenue
nature.

       (a) Rs 2,000 spent on dismantling, removing and reinstalling plant and machinery
           to a more convenient site.
       (b) Rs.600 paid for removal of stock to a new site.
       (c) Rs.1, 000 paid for erection of a new machine.
       (d) Rs.2,000 paid on repairing of the new factory.
       (e) A car’s engine, rings, and pistons were changed at a cost of Rs. 3,000. This
           resulted in improvements in mileage to 30 kms per litre of petrol. It had fallen
           from 15 kms to 8 kms.
       (f) A building constructed in 1960 was depreciated by the year 1990 to Rs. 5,000
           It was demolished and a new building was constructed at a cost of Rs. 3
           lakhs including Rs.10,000 for demolishing the old building.
(b) Explain in brief perpetual inventory system and how is stock valued for the purpose
of accounting.

Problem 4

From the following particulars prepare a cash book with cash, Bank and Discount
columns
Jan 1 Cash in hand Rs, 14,000; balance at bank Rs. 5,000.
Jan 3 Paid sales Rs. 6,000.
Jan 5 Paid Rs. 7,000 into bank.
Jan 6 Received a cheque for Rs 700 from Suraj.
Jan 8 Paid into bank Suraj’s cheque of Rs.700.
Jan 10 Paid to Anurag by cheque Rs. 980 in full settlement of his account of Rs.
1,000.
Jan 11 Withdrew from bank for office Rs.4, 000.
Jan 12 Cash sales Rs. 8,000.
Jan 13 Received a cheque from John for Rs. 10,000 and lodged it into the bank for
clearance.
Jan 14 Paid commission to Ram by cheque Rs. 500.
Jan 15 John’s cheque dishonored.
Jan. 29 Drew a cheque for Rs 800 for personal use.
Jan 31 Paid salaries by cheque s. 1,500 and by cash Ras.500.
Jan 31 Bank charges Rs 20 and insurance premium Rs. 520 as shown in Pass Book.




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Problem 5

 From the following Trial Balance prepare the Trading and Profit and Loss Account for
the year ending 31st March, 2005 and the Balance Sheet as on that date:

Particulars                              Debit                   Credit
                                          Rs                       Rs
Shri Banker’s Capital Account                                    41,000
Shri Banker’s Drawing Account            6,100
Mrs Banker’s Loan Account                                         4,000
Sundry Creditors                                                 45,000
Cash in Hand                              250
Cash at Bank                            4,000
Sundry Debtors                         40,500
Patents                                 2,000
Plant and Machinery                   20,000
Land and Buildings                    26,000
Purchases of Raw Materials            35,000
Raw Material:       1.4. 04            3,500
Work – in - process 1.4. 04            2,000
Finished Stock      1.4. 04           18,000
Carriage Inwards                       1,100
Wages                                 27,000
Salary of Works Manager                5,600
Factory Expenses                       3,400
Factory Rent and Taxes                 2,500
Royalties (paid on sales)              1,200
Sales (less Returns)                                            1,23,400
Advertising                           3,000
Office Rent and Insurance             4,800
Printing and Stationery               1,000
Office Expenses                       5,800
Carriage Outwards                       600
Discounts                             1,400                      2100

Bad debts                               750
                        Total        2,15,500                 2,15,500


The Stock on 31st March 2005 was as follows:
Raw Materials Rs 4,000; work –in- progress Rs 4,500, finished goods Rs. 28,000.




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Problem No 6

The following are the figures extracted from the books of New Era Bank Limited, as on
31- 3 – 2004: (figures in rupees)

Interest and Discount received   37,05,738       Commission, exchange       1,90,000
                                                 and brokerage
Interest paid on Deposits        20,37,452       Rent received                65,000
Issued and Subscribed Capital    10,00,000       Profit on sale of          2,00,000
                                                 investments
Salaries and allowances           2,00,000       Depreciation of Bank’s       30,000
                                                 properties
Directors’ fees and allowances      30,000       Stationery expenses          40,000
Rent and taxes paid                90,000        Preliminary expenses         25,000
Postage and telegrams              60,286        Auditors’ fees                5,000
Statutory reserve fund           8,00,000

Other information:

(a)   A customer to whom a sum of Rs. 10 lakhs has been insolvent and it is expected
      that only 50% can be recovered from his estate.
(b)   Also there were other debts, for which a provision of Rs. 1,50,000 was found
      necessary by the auditors.
(c)   Rebate on bills discounted on 31.3. 2003 was Rs. 12,000 and on 31.3.2004 was
      Rs. 16,000.
(d)   Provide Rs. 6,50,000 for Income tax.
(e)   The directors desires to declare 10% dividends.
(f)   A sum of Rs.20,000 was spent by a large factory in overhauling its entire plant
      which resulted in adding three years to its working life.
(g)   Heavy legal expenditure incurred by a newspaper company to defend a lawsuit.
(h)   Cost of Rs. 10,000 incurred in increasing the sitting accommodations and Rs.
      5,000 in repainting of a cinema house.

Prepare the profit and Loss Account of New era Bank Ltd. for the year ended on
31.3.2004.

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