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BRIDGE TEST SERIES – SEPT 2024 EXAMS

ACCOUNTING
Total Marks: 100 Time allowed: 3 Hours
Question no.1 is compulsory
Answer any Four questions from the remaining Five Questions
Wherever necessary, suitable assumptions has to be made and disclosed
by way of notes forming part of the answer.

Working Notes should form part of the Answer.

1. (a) State with reasons whether the following statements are True or False:
i.Amount deposited in MTNL is neither Capital nor Revenue Expenditure but will be
treated as a deferred expenditure.

ii. The aim of the accounting is to keep systematic record to ascertain the financial
performance and position of the company and to communicate the same with
members of the company.

iii. If the value of Closing Inventory is overstated, then Net profit will also be
overstated.

iv. New partner is entitled to have share in reserves appearing in Balance sheet prior
to his admission.

v. In case of Pro-rata allotment where shares are issued at premium, the excess
money received on application will adjusted to Securities premium account only.

vi. Receipts and Payments a/c in the books of NGO is equivalent to Trading a/c of
other entities and Income and Expenditure a/c of NGO is equivalent to Profit and
Loss a/c of other entities.
(6 x 2 = 12 Marks)

(b) Write atleast six differences between Bills of Exchange and Promissory Note.
(4 Marks)
 (c) The Machinery account of a factory showed a balance of ₹95 Lakhs on 1 st April
2023. The books of accounts of the factory are closed on 31st March 2024. Depreciation is
written off @ 10% under diminishing value method. On 11 th September a new machine
costing ₹14.56 lakhs was acquired and incurred ₹44,600 as installation charges. On 1 st
September, 2023 a machine which had a cost of ₹ 13,85,600 on 1 st April, 2021 was sold
for ₹ 4,52,890. Another machine which had a cost of ₹ 15,74,000 on 1 st April, 2022 was
scrapped on 1st September, 2023 and it had Zero residual value.

Calculate the amount of Loss to be debited in the Profit and Loss account of the factory
for the year ended 31st April 2024. (4 Marks)

2. (a) Mr. Nantha’s Trial Balance as on 31/03/2024 didn’t agree. The difference was put
to a suspense account.

During the next accounting period, the following errors were discovered

i. The total of purchase book of one page, ₹4,539 was carried forward to next page
as ₹4,593
ii. Purchase of vehicle on 30/09/2023 was debited to Salaries account - ₹3,000
iii. Goods worth ₹1,600 were sent on Sale or Return basis to a customer and entered
in the sales book at the close of the year; the customer still had the option to
return the goods. The gross profit margin was 25% on cost.
iv. Amount of ₹2,395 of purchase was wrongly posted as ₹2,593

Depreciation @ 10% has to be charged on Vehicles. You are required to pass necessary
journal entry for rectification and prepare both Suspense A/c and Profit and loss
adjustment A/c. (10 Marks)

(b) Based on the following extracts from the Cash Book and the Pass Book for the month
of January, 2024, prepare the Bank Reconciliation Statements as on 31st Jan., 2024. Cash
Book (Bank Columns Only)

Amount
Date Particulars (₹) Date Particulars Amount (₹)
3-Jan-24 To Cash 300 1-Jan-24 By Balance b/d 5,000
4-Jan-24 To Ram 1,300 16-Jan-24 By Cash 300
5-Jan-24 To Shyam 250 17-Jan-24 By Bharat 1,350
6-Jan-24 To Krishna 500 18-Jan-24 By Charat 500
To Bill of
10-Jan- Exchange
24 (Discount - ₹ 100) 1,900
31-Jan
24 To Balance c/d 2,900
7,150 7,150

Pass Book
Date Particulars Withdrawal Deposits Dr./Cr Balance
2024 ₹ ₹ ₹ ₹ ₹
Jan 1 To balance b/d ---- ---- Dr. 5,000
Jan 3 By Cash ---- 300 Dr. 4,700
Jan 8 By Shyam ---- 250 Dr. 4,450
Jan 9 By Krishna ---- 500 Dr. 3,950
Jan 10 To Krishna’s 500 ---- Dr. 4,450
Cheque
dishonored
By Bills of 100 2,000 Dr. 2,550
Exchange
(discounted)
To Bills of 2,000 ---- Dr. 4,550
Exchange
(Dishonored)
Jan 16 To Cash 300 ---- Dr. 4,850
Jan 18 To Bharat 500 ---- Dr. 5,350
Jan 31 To Bank 20 ---- Dr. 5,370
Jan 31 To LIC Premium 250 ---- Dr. 5,620
Jan 31 By Dividend and ---- 1,050 Dr. 4,570
interest collected
as per instruction
(10 Marks)

3. (a) The following is a balance sheet of Raj ltd. as on 31st March 2023:

Capital ₹ 10,00,000

Creditors (Trade) ₹ 1,40,000

Fixed Asset ₹ 4, 00,000

Stock ₹ 3,00,000

Debtors ₹ 1,50,000

Profit & loss A/c ₹ 60,000

Cash & Bank A/c ₹ 3,50,000

The management estimates the Purchases and Sales for the year ended 31st March, 2024
as under:

Particulars Upto Upto

29/02/2024 (₹) 31/03/2024 (₹)
Purchases 14,10,000 1,10,000
Sales 19,20,000 2,00,000

It was decided to invest ₹ 1,00,000 in purchase of Fixed Asset, which are depreciated @
10% on Cost.

The time lag for payment to trade creditors for purchase and receipt for sales is one
month. The business earns a gross profit of 30% on turnover. The expense against gross
profit stands at 10% of turnover. The amount of depreciation is not included in these
expenses.

Draft a balance sheet as at 31st March, 2024 assuming that creditors are all trade
creditors for purchases and debtors for sales and there is no other item of current asset
and current liabilities apart from stock and Cash and Bank balances. Assume that all
purchases and sales are on credit basis. (10 Marks)

(b) X, Y and Z are partners sharing profits and losses in the ratio of 1:2:3. The balance
sheet as on 31st March 2023 was as follows:

Liabilities ₹ Assets ₹
Capital Building 2,50,000
X 1,75,000 Machinery 3,37,500
Y 2,50,000 Debtors 3,25,000
Z 4,00,000 Stock 4,00,000
General Reserves 3,00,000 Bank 62,500
Trade creditors 2,50,000
Total 13,75,000 Total 13,75,000
Z retired from business on 1st April 2021 on the following terms:

(i) Building to be appreciated by 25%.

(ii) X and Y to bring in additional capital of ₹5,00,000 each.

(iii) Machinery to be depreciated by 10%

(iv) Stock is revalued at ₹3,72,250.

(v) Provision for Doubtful Debts at 4%.

(vi) Goodwill was to be valued at 3 years’ purchase of average profits of past 3 years. The
profits of past 3 years were ₹2,75,000, ₹2,50,000 and ₹1,95,000 respectively.

(vii) Goodwill was not to be raised in the Books of Accounts.

(viii) Balance payable to Z was to be paid immediately.

Prepare Revaluation Account, Bank Account and Partners’ Capital Accounts after giving
effect to Z’s retirement. Also show the valuation of Goodwill and provide the Journal
Entry for adjustment of Goodwill. (10 Marks)

4. (a) Ram, Jaanu and Siva are partners sharing profits and losses in the ratio of 5:3:2.
Their capitals were ₹ 13,440, ₹ 8,400, ₹ 11,760 respectively.

Assets and liabilities of the firm are as under:

Liabilities ₹

Trade creditors 2,800

Loan from Partners 1,400

Assets:

Patent 1,400

Furniture 2,800

Machinery 1,680

Stock 5,600

The assets are realized in order in which they are listed above.

Jaanu is insolvent.

You required to prepare a statement showing the full distribution of cash as and when
available, applying maximum possible loss procedure.
(b) The following is the Receipts and Payments Account of Mumbai Club for the year
ended March 31, 2024:

Receipt and Payment Account of Mumbai Club

Receipts Amount Payments Amount
(₹) (₹)

Cash in hand 20,000Ground man's Fee 75,000

Balance at Bank as per Pass Purchase of Equipment’s 1,55,000

Book:

Saving Account 1,93,000Rent of Ground 25,000

Current Account 60,000Club night expenses 38,000

Bank Interest 5,000Printing and Office Expenses 30,000

Donations and Subscriptions 2,50,000Repairs to Equipment 50,000

Entrance fees 18,000Honorarium to Secretary 40,000

(2019-20)

Contribution to Club night 10,000Balance at Bank as per Pass

Book:

Sale of Equipment 8,000Saving Account 2,04,000

Bar Room receipts 20,000Current Account 20,000

Proceeds from club night 78,000Cash in hand 25,000

6,62,000 6,62,000

You are given the following additional information (All figures are in ₹)

01.04.20 31.03.21

Subscription due 15,000 10,000

Amount due for printing etc. 10,000 8,000

Cheques unpresented being payment for repairs 30,000 25,000

Interest not yet entered in the Pass book - 2,000

Estimated value of machinery and equipment 80,000 1,75,000

For the year ended March 31, 2024, the honorarium to the Secretary is to be increased
by a total of ₹ 20,000 and Ground man is to receive a bonus of ₹ 20,000. Prepare the
Income and Expenditure Account for period ended 31st March,2024 and the Balance
Sheet as at that date. (10 Marks)

5. (a) One of your clients Mr. X asked you to finalize his account for the year ended 31st
March,2024. As a basis for audit, Mr. X furnished you with the following statement:

Dr. Cr.
X's Capital 4,668
X's Drawings 1,692
Leasehold Premises 2,250
Sales 8,250
Due from customers 1,590
Purchases 3,777
Purchase Return 792
Loan from Bank 768
Trade Expense 2,100
Trade Payable 1,584
Bills Payable 300
Salaries and Wages 1,800
Cash at Bank 678
Opening Inventory 792
Rent and Rates 1,389
Sales Return 294
16,362 16,362

The closing inventory was ₹ 1,722. Mr. X claims that he has recorded every transaction
correctly as the trial balance is tallied. Check the accuracy of the above trial balance and
give reasons for the errors, if any. (5 Marks)

(b) From the following particulars prepare manufacturing Account and Trading Account for
the year ended 31st March, 2024.
Particulars Amount (₹) Particulars Amount (₹)
Opening Stock of 10,000 Closing Stock of 4,000
Raw Materials Raw Materials
Opening Stock of 7,000 Closing Stock of WIP 8,000
WIP
 Purchases 60,000 Opening stock of 5,000
Finished goods
Return Outward of 500 Purchase of 20,000
Raw Material Finished Goods
Wages 4,500 Return outward of 1,500
Finished Goods
Gas and Fuel 1,000 Freight of Finished 600
Goods
Factory Rent 500 Sale of Finished 1,20,000
goods
Power 600 Return Inwards of 2,000
Finished Goods
Consumable Stores 700 Closing Stock of 8,000
Finished Goods
Freight on Purchase 1,800
(5 Marks)

(c) Bright Future ltd. (Unlisted other than AIFI, Banking Company, NBFC and HFC), provides
the following information as at 31St March, 2023

Particulars ₹ ₹
Shareholder’s Fund
(a) Authorized Share Capital
90,000 equity shares of ₹ 10 each fully 9,00,000
paid up
Issued, Subscribed & Paid Up
60,000 equity shares of ₹ 10 each fully 6,00,000
paid up
(b) Reserves & Surplus
Profit & Loss A/c 3,24,000
Debenture redemption reserve 36,000 3,60,000
Non-Current Liabilities
(a) Long Term Liabilities
12% Debentures 3,60,000
Current Liabilities
(a) Trade Payables 3,45,000
Total 16,65,000
Non-Current Assets
(a) Property, Plant and Equipment 3,45,000
(b) Non-Current Investment (DRR 54,000 3,99,000
Investment)
Current Assets
(a) Inventories 4,05,000
(b) Trade receivables 2,25,000
 (c) Cash in Hand 90,000
(d) Cash at Bank 5,46,000 12,66,000
Total 16,65,000
At the AGM on 01.04.2023, it was resolved that:

a) To give existing equity shareholders the option to purchase one ₹ 10 share at ₹ 15

for every four shares (held prior to bonus distribution. This option was taken up by
every shareholders.
b) To issue one bonus share for every five shares held
c) To repay the debentures at premium of 3%

Give necessary journal entries for these transaction (10 Marks)

6. (a) A Limited issued 20,000 Equity shares of, 10 each at a premium of 10%, payable

₹ 2 on application;

₹ 4 on allotment (including premium);

₹ 2 on first call and balance on the final call.

All the shares were fully subscribed. Mr. M who held 2000 shares paid full remaining
amount on first call itself. The final call which was made after 4 months from the first call
was fully paid except a shareholder having 200 shares and one another shareholder having
100 shares. They paid their due amount after 3 months and 4 months respectively along
with interest on calls in arrears, Company also paid interest on calls in advance to Mr. M.
The Company maintains Calls in Arrear and Calls in Advance A/c. Give journal entries to
record these transactions. Show workings of Interest calculation. (Ignore dates).
(15 Marks)

(b) . What are the inclusions and exclusions from determining the cost of an asset?

(5 Marks)