IV-SEMESTER SEE EXAMINATION, April –2024

Class : DCH UID No.:

Subject : Financial Management - II Max. Duration : 3 Hours.
Sub. : Max. Marks : 60 Marks
CH 18601
Code:
Date : Session :

SECTION – A MARKS BT CO

Answer ALL the following short questions: 10 X 20 = 20 MARKS

1.Difference between statement of affairs and balance sheet (2) 1 1

2.Define Hire purchase and Instalment purchase system (2) 2 1

3. Write the treatment if there is any default in the payment of instalment under hire (2) 1 2
purchase and Instalment purchase system

4. Define Partnership (2) 1 2

5. Rules applicable in the absence of partnership deed (2) 1 3

6. Sacrificing and Gaining Ratio (2) 1 3

7. Methods of valuating Goodwill and Formulae (2) 2 4

8. What are the reasons or modes of dissolution of partnership firm (2) 2 4

9. Difference between Realisation A/c and Revaluation A/c (2) 2 5

10. Define Single entry system. (2) 1 5

SECTION – B MARKS BT CO

Answer any FIVE of the following questions: 5 X 8 = 40 MARKS

Unit-I
1. From the following forecasts of income and expenditure, prepare a cash (8) 1 1
budget for the months January to April, 2015:
15 Marks
Months Sales Purchases Wages Mnfg Admin Selling
(credit) (credit) Exp Exp Exp

2014 Nov 30,000 15,000 3,000 1,150 1,060 500

Dec 35,000 20,000 3,200 1,225 1,040 550
2015 Jan 25,000 15,000 2,500 990 1,100 600
Feb 30,000 20,000 3,000 1,050 1,150 620
 Mar 35,000 22,500 2,400 1,100 1,220 570
Apr 40,000 25,000 2,600 1,200 1,180 710

Additional information is as follows:

1. From the total sales 25% are cash sales and From the credit sales
50% are collected in month following the sale, 30% in the second
following month and the remaining in the third following month.
2. Capital expenditure to be incurred: Plant purchased on 15th of Jan for
Rs.5,000; a Building has been purchased on 1st Mar and the payments
are to be made in monthly installments of Rs.2,000 each.
3. A dividend of Rs.10,000 is payable in April.
4. Half of the purchases are for cash and The creditors are allowing a
credit of two months.
5. Wages are to be paid on the 1st of the next month.
6. Lag in payment of other expenses is two months.
7. Balance of cash in hand on 1st Jan, 2015 is RS. 15,000.

2. B) The following is the Balance sheet of A, B and C sharing (8) 1 1

profits and losses in proportion of 6/14, 5/14 and 3/14 respectively.

Rs. Rs.
Creditors 18,900 Cash 1,890
Bills payable 6,300 debtors 26,460
General Reserve 10,500 Stock 29,400
A’s Capital 35,400 Furniture 7,350
B’s Capital 29,850 Land & Buildings 45,150
C’s Capital 14,550 Bills Receivable 5,250
1,15,500 1,15,500
They agreed to take D into partnership and give him 1/8th share on the
following terms:
(i) That furniture be appreciated by Rs. 920
(ii) That stock be depreciated by 10%
(iii) A provision of Rs. 1,320 be made for outstanding repair bills
(iv) That the value of land & buildings having appreciated to be
brought upto Rs. 59,850
(v) That D should bring in as his share of Goodwill Rs. 14,700
(vi) That D should bring in Rs. 14,700 as his capital
(vii) That after making the above adjustments the capital accounts
of old partners be adjusted on the basis of D’s capital to his
share in the business i.e. actual cash to be paid off or brought
in by the old partners as the case may be.
Pass the necessary Journal entries and prepare the Balance sheet after
admission.
 Unit-II
3) Selva and Co. desires to purchase a business and has consulted you and one (8) 1 2
point on which you are to advise them is the average amount of working capital
which will be required in the first year’s working. You have given the following
estimates and instructed to add 10% to your computed figure to allow for
contingencies.
(i) Amount blocked up for stocks: Figures for the year Stocks of finished
product 3,000 Stocks of stores, materials, etc., 5,000
(ii) Average credit given: Inland sales 4 weeks credit 26,000 Export sales— 1.5
weeks credit 65,000 (iii) Lag in payment of wages and other outputs Wages —
1.5 weeks 2,40,000 Stocks of materials, etc. — 1.5 month 36,000 Rent,
Royalties, etc.—4 months 8,000 Clerical staff— 1.5 month 60,000 Manager—
½ month 4,000 Miscellaneous expenses— 1.5 month 36,000
(iv) Payment in advance Sundry Expenses (paid quarterly in advance) 6,000
(v) Undrawn profit on the average throughout the year 9,000
State your calculations for the average amount of working capital required.
Or
4. A proforma cost sheet of a company provides the following particulars: (8) 1 2
Particulars Amount per unit
Elements of Cost:
Raw materials 80

Direct labour 30
Overheads 60
Total cost 170
Profit 30
Selling price 200
The following further particulars are available:
Raw materials in stock, on average, one month;
Materials in process (completion stage, 50 per cent), on average, half a month;
Finished goods in stock, on average, one month.
Credit allowed by suppliers is one month;
Credit allowed to debtors is two months;
Average time-lag in payment of wages is 1.5 weeks and one month in overhead
expenses;
one-fourth of the output is sold against cash;
cash in hand and at bank is desired to be maintained at Rs 3,65,000.
You are required to prepare a statement showing the working capital needed to finance a
level of activity of 1,04,000 units of production. You may assume that production is
carried on evenly throughout the year, and wages and overheads accrue similarly. For
calculation purposes, 4 weeks may be taken as equivalent to a month.
Unit-III

5. A company has prepared the following projections for a year (8) 1 3

Sales 2100 units

Selling Price per unit Rs. 40

Variable Costs per unit Rs 25

 Total Costs per unit Rs 35

Credit period allowed One month

The company proposes to increase the credit period allowed to its customers from one
month to two months. It is envisaged that the change in policy as above will increase the
sales by 8%. The company desires a return of 25% on its investment. You are required
to examine and advise whether the proposed credit policy should be implemented or
not?

Or
6 The partnership of A, B and C sharing profits and losses in the ratio of 4:3:2 is (8) 1 3
dissolved on C becoming Bankrupt (insolvent) on 31st Dec 2015. Their Balance sheet on
that date is as follows:
Liabilities Rs. Assets Rs.
Sundry Creditors 5,000 Cash 2,000
A’s Loan A/c 3,900 debtors 6,000
Capital Account: Stock 5,000
A 10,000 Furniture 4,000
B 5,000 Machinery 10,000
Reserve Fund 3,870 c’s Capital a/c 770

27,770 27,770

The assets realized:- Debtors 25% less, Furniture 10% less,

Machinery 15% less, Stock is taken over by A at an agreed value of
Rs. 4,000. Expenses of realization amounted to Rs. 100. The
liabilities were paid off. A sum of Rs. 430 is received from C’s estate
in full settlement of his indebtedness to the firm. Write the necessary
ledger accounts to close the books of the Firm.

Unit-IV
7. Mr. Ramlal keeps his books under single entry system. (8) 1
Particulars 01.01.2015 31.12.2015
Rs. Rs.
Bank OD 10,000 12,000
Furniture 20,000 20,000
Land and Building 70,000 70,000
Investments - 10,000
Sundry Debtors 20,000 30,000
Sundry Creditors 30,000 40,000
Stock 45,000 50,000
Motor car (1.7.2015) - 20,000
Cash 10,000 20,000
Plant and Machinery 40,000 40,000

Find out risk and return of the portfolio.

Or
8. What is Alpha and Beta and write its calculation procedure. (8) 1
Unit-V
9. Write about different types of mergers (8) 1

Or
10. Write about buyback of shares and its procedure (8) 1

NOTE: Attempt A& B from each question. Don’t Attempt Either A or B from Different
Questions in each Unit