Financial Accounting Solved Question Papers November' 2013, Dibrugarh University B.Com 1st Sem

Financial Accounting Solved Question Papers November' 2013
Dibrugarh University B.Com 1st Sem
2013 (November) - Semester

Full Marks: 80

Pass Marks: 32

1. (a) Write True or False: 1x3=3

(i) Loss of stock by fire is shown on the credit side of Profit and Loss account. False

(ii) Hire-purchase transactions are governed by the Hire Purchase Act, 1972. True

(iii) When firms are amalgamated, Realisation accounts are prepared to close the books of such firms. True

(b) Fill in the blanks: 1x3

(i) Royalty paid on sales debited to Profit and Loss Account.

(ii) A branch is simply a separate unit of a business enterprise.

(iii) When a partner is not able to meet his liabilities, he is said to be insolvent.

(i) Accounting standard deals with depreciation is (5/6/7).

(ii) Under the stock and debtors system, Branch Stock Account is a (Personal Account/ Real Account/ Nominal Account).

2. Write brief short notes on (any four) 4x4=16

(a) Features of Accounting Principles

Ans: Essential features of Accounting Principles

Man made: Accounting principles are manmade. They are not tested in a laboratory.
Objectivity: It means accounting principles must be based on facts and free from personal bias or judgment of the individuals who prepares the statements.
Usefulness/relevance: Accounting principles must be relevant and useful to the person who is using financial statements.
Feasibility: The accounting principles should be practicable or feasible.
Axiom: It denotes a statement of truth which cannot be questioned by anyone.

(b) Goods in Transit

Ans: Goods in transit: When goods are dispatched by the head office to branch and the branch does not receive it even upto the end of the year, it is known as goods in transit. In the same way when goods are returned by branch to head office and the head office does not receive it upto the end of the year it is also known as goods in transit.

It is quite understandable that a difference should arise in the balances of two accounts due to these transactions. Therefore, to reconcile, the following journal entry will be passed in head office books in both the circumstances:

Goods in Transit a/c Dr.

To Branch a/c

(Goods in transit taken into books)

In the Balance Sheet of Head office both the above items will be shown as an asset.

Ans: The hire-purchase agreement stipulates the circumstances in which the agreement can be terminated. The agreement is generally terminated by return of the goods by the hirer, notice of termination by the owner on account of hirers breach of conditions or notice of termination by the hirer. The hirer may, at Dairy time before the final payment under the hire-purchase agreement falls due, and after giving the owner not less than fourteen days’ notice in writing of his intention so to do, terminate the hire-purchase agreement. Where a hire-purchase agreement is terminated under this Act, then the owner shall be entitled to retain the hire which has already been paid and to recover the arrears of’ hire due.

(d) Capital Expenditure

(e) Treatment of goodwill on dissolution of a partnership firm.

3.(a) Following is the trial balance of Jaipal and Rampal as on 31st March, 2013:

Debit	Amount	Credit	Amount
Stock on 1.4.2012 Bills receivable Purchases Return Inward Plant and Machinery Furniture Sundry Debtors Cash at Bank Salaries Wages Rent and Taxes Insurance Printing & Stationery General Expenses Power and Fuel Drawings: Jaipal Rampal	200000 25000 275000 5000 100000 50000 120000 76000 12000 19000 11500 3000 2000 6500 4500 20000 15000	Capital Accounts: Jaipal Rampal Sales Bills Payable Return Outwards Sundry Creditors	180000 150000 400000 20000 4500 190000
	944500		944500

From the following additional information, you are required to prepare Trading and Profit & Loss Accounts and also Balance sheet of Jaipal and Rampal for the year ended on 31st March, 2013: 3+4+5=12

Stock as on 31.03.2013 Rs. 150000
A credit sale of Rs. 4000 has not been recorded in the books
Uninsured stock worth Rs. 6000 has been destroyed by fire.

Solution:

Trading and Profit & Loss A/c

Particulars	Amount	Particulars	Amount
To Opening Stock To Purchases 2,75,000 Less: Loss by fire 6,000 2,69,000 Less: Returns 4,500 To Wages To Fuel & Power To Gross Profit c/d	2,00,000 2,64,500 19,000 4,500 61,000	By Sales 4,00,000 Add: Credit 4,000 4,04,000 Add: sales omitted 5,000 By Closing Stock	3,99,000 1,50,000
	5,49,000		5,49,000
To General Expenses To Loss by fire To Salaries To Rent & Taxes To Insurance To Printing & Stationary To Net Profit c/d	6,500 6,000 12,000 11,500 3,000 2,000 20,000	By Gross Profit b/d	61,000
	61,000		61,000

Profit & Loss Appropriation A/c

Particulars	Amount (Dr)	Particulars	Amount (Cr)
To Share of Profit: Jaipal = 20,000 x 1/2 Rampal = 20,000 x 1/2	10,000 10,000	By Net Profit b/d	20,000
	20,000		20,000

Partner’s Capital A/c

Particulars	Jaipal	Rampal	Particulars	Jaipal	Rampal
To Drawings To Balance c/d	20,000 1,70,000	15,000 1,45,000	By Balance b/d By P/L Appropriation A/c	1,80,000 10,000	1,50,000 10,000
	1,90,000	1,60,000		1,90,000	1,60,000

Balance Sheet

Liabilities	Amount	Assets	Amount
Bills Payable Sundry Creditors Capital Accounts: Jaipal = 1,70,000 Rampal = 1,45,000	20,000 1,90,000 3,15,000	Bills Receivable Plant & Machinery Furniture Sundry Debtors 1,20,000 Add: Credit sale omitted 4,000 Cash at Bank Closing stock	25,000 1,00,000 50,000 1,24,000 76,000 1,50,000
	5,25,000		5,25,000

(b) What do you mean by “Accounting Standards”? Mention the procedure for issuing Accounting standards. Distinguish between Accounting Standard and Accounting Principles. 2+5+5=12

Ans: ACCOUNTING STANDARDS: Accounting Standards are the policy documents or written statements issued, from time to time, by an apex expert accounting body in relation to various aspects of measurement, treatment and disclosure of accounting transactions for ensuring uniformity in accounting practices and reporting. These standards are prepared by Accounting Standard Board (ASB). Accounting Standards are formulated with a view to harmonies different accounting policies and practices in use in a country.

Procedure adopted in formulation of Accounting Standards:

The Institute of Chartered Accountants of India (ICAI), recognising the need to harmonies the diverse accounting policies and practices, constituted an Accounting Standards Board (ASB) on April 21, 1977. The main function of ASB is to formulate accounting standards so that such standards may be mandated by the Council of ICAI. While formulating the standards in India, ASB will take into consideration the applicable laws, customs, usages and business environment.

Following procedure will be adopted for formulating Accounting Standards:

Identification of the broad areas by the ASB for formulating the Accounting Standards.
Constitution of the study groups by the ASB for preparing the preliminary drafts of the proposed Accounting Standards.
Consideration of the preliminary draft prepared by the study group by the ASB and revision, if any, of the draft on the basis of deliberations at the ASB.
Circulation of the draft, so revised, among the Council members of the ICAI and 12 specified outside bodies such as Standing Conference of Public Enterprises (SCOPE), Indian Banks’ Association, Confederation of Indian Industry (CII), Securities and Exchange Board of India (SEBI), Comptroller and Auditor General of India (C& AG), and Department of Company Affairs, for comments.
Meeting with the representatives of specified outside bodies to ascertain their views on the draft of the proposed Accounting Standard.
Finalisation of the Exposure Draft of the proposed Accounting Standard on the basis of comments received and discussion with the representatives of specified outside bodies.
Issuance of the Exposure Draft inviting public comments.
Consideration of the comments received on the Exposure Draft and finalisation of the draft Accounting Standard by the ASB for submission to the Council of the ICAI for its consideration and approval for issuance.
Consideration of the draft Accounting Standard by the Council of the Institute, and if found necessary, modification of the draft in consultation with the ASB.
The Accounting Standard, so finalised, is issued under the authority of the Council.

4. (a) What is “Hire-Purchase System? Mention its important features. Distinguish between hire-purchase system of sales and ordinary credit sales. 2+4+5=11

Ans: Hire Purchase - Meaning: A trader could sell goods either for cash or for credit. For goods sold on credit, the payments may be made by the buyer in lump sum on a future date, or in installments spread over for a specified period of time. When goods are sold on credit, for which payment is made by the buyer in installments over a period of time, it is called purchase system or installment system.

Hire Purchase System defers to the system wherein, the seller of goods transfer the goods to the buyer without transferring the ownership of goods. The payment for the goods will be made by the buyer in installments. If the buyer pays all the installments, the ownership of the goods will be transferred, on payment of the last installment. However, if the buyer does not pay for any installment, the goods will be repossessed by the seller and the money paid on earlier installments will be treated as hire charges for using the goods. So, under this system, the transaction may result in purchasing of goods by the buyer or in hiring the goods. Hence, the system is called Hire Purchase System.

Characteristics of Hire-Purchase System

The characteristics of hire-purchase system are as under

Hire-purchase is a system of credit sale.
The price under hire-purchase system is paid in installments.
The goods are delivered in the possession of the purchaser at the time of commencement of the agreement.
Hire vendor continues to be the owner of the goods till the payment of last installment.
The hire-purchaser has a right to use the goods as a bailer.
The hire-purchaser has a right to terminate the agreement at any time in the capacity of a hirer.
The hire-purchaser becomes the owner of the goods after the payment of all installments as per the agreement.
If there is a default in the payment of any installment, the hire vendor will take away the goods from the possession of the purchaser without refunding him any amount.

Difference between Sale and Hire Purchase

Although hire purchase system could ultimately result in sale of goods, the sale in normal sense and sale under hire purchase system are not the same. The following are the differences between sale and hire purchase.

Sale	Hire Purchase
A ‘sale’ is governed by the sale of Goods Act, 1930.	Hire purchase is governed by the Hire Purchase Act, 1972.
In case of sale, the ownership of the goods is transferred to the buyer immediately.	In case of Hire purchase, the ownership of goods is transferred to buyer on payment of all installments.
In case of sale, the buyer makes payment in lump sum.	In case of hire purchase, the payment is made in installments.
The buyer pays only for the price of goods.	The hire purchaser pays for the price of goods and also some amount of interest.
On non-payment of the consideration the seller cannot take back the goods, but can only take legal action on buyer.	On non-payment of any installment, the seller can re-possess the goods.
Once a sale has taken place, neither the seller, nor the buyer can terminate the contract (unless it is for genuine reason like damage of goods etc.)	Either the buyer or the seller can terminate the contract at any point of time, until the payments of last installment.
When the buyer becomes insolvent, the seller has to undertake the risk of loss.	When the hire purchaser becomes insolvent, the seller can reposes the goods, and hence need not undertake the risk of loss.
A sale is subject to levy of sales tax at the time of contract of sale.	In this case, the sales tax will be leviable at the time of ownership (i.e. on payment of last installment).

(b) Delta Company purchases a motor car from Meghna motor company on the instalment system on 1.4.2010. the terms of payment were Rs. 120000 payable immediately on delivery and the balance by three annual instalments of Rs.120000 each on 31st March every year. The cash price of the motor car was Rs.450000.

The vendor charges interest @5% p.a. on the yearly balances. Depreciation @10% p.a. was written off on the written down value system.

From the above particulars, prepare the following ledgers in the books of delta company for the period: 4+4+3=11

Motor Car Account
Meghna motor Company’s Account
Interest Suspense Account

Solution:

Calculation of Interest:

	Rs.
Cash Price (1.4.10) Less: Down Payment	4,50,000 1,20,000
Add: Interest A/c (31.3.11)	3,30,000 16,500
Less: 1st Installment	3,46,500 1,20,000
Add: Interest A/c (31.3.12)	2,26,500 11,325
Less: 2nd Installment	2,37,825 1,20,000
Add: Interest A/c (31.3.13)	1,17,825 2,175
Less: 3rd Installment	1,20,000 1,20,000
	NIL

Calculation of Depreciation:

	Rs.
Cash Price (1.1.10) Less: Depreciation @ 10% (31.3.11)	4,50,000 45,000
B.V. (1.4.11) Less: Depreciation @ 10% (31.3.12)	4,05,000 40,500
B.V. (1.4.12) Less: Depreciation @ 10% (31.3.13)	3,64,500 36,450
	3,28,050

Journal Entries

In the books of Delta Company (Vendee)

Date	Particulars	L/F	Dr. Amount	Cr. Amount
1.4.10	Motor Car A/c Dr. Interest Suspense A/c Dr. To Meghna Motor Co. A/c		4,50,000 30,000	4,80,000
1.4.10	Meghna Motor Co. A/c Dr. To Bank A/c		1,20,000	1,20,000
31.3.11	Interest A/c Dr. To Interest Suspense A/c		16,500	16,500
31.3.11	Meghna Motor Co. A/c Dr. To Bank A/c		1,20,000	1,20,000
31.3.11	Depreciation A/c Dr. To Motor Car A/c		45,000	45,000
31.3.11	Profit & Loss A/c Dr. To Interest A/c To Depreciation A/c		61,500	16,500 45,000
31.3.12	Interest A/c Dr. To Interest Suspense A/c		11,325	11,325
31.3.12	Meghna Motor Co. A/c Dr. To Bank A/c		1,20,000	1,20,000
31.3.12	Depreciation A/c Dr. To Motor Car A/c		40,500	40,500
31.3.12	Profit & Loss A/c Dr. To Interest A/c To Depreciation A/c		51,825	11,325 40,500
31.3.13	Interest A/c Dr. To Interest Suspense A/c		2,175	2,175
31.3.13	Meghna Motor Co. A/c Dr. To Bank A/c		1,20,000	1,20,000
31.3.13	Depreciation A/c Dr. To Motor Car A/c		36,450	36,450
31.3.13	Profit & Loss A/c Dr. To Interest A/c To Depreciation A/c		38,625	2,175 36,450

Ledger

In the books of Delta Company

Motor Car A/c

Dr. Cr.

Date	Particulars	Amount	Date	Particulars	Amount
1.4.10	To Meghna Motor Co.	4,50,000	31.3.11 31.3.11	By Depreciation A/c By Balance c/d	45,000 4,05,000
		4,50,000			4,50,000
1.4.11	To Balance b/d	4,05,000	31.3.12 31.3.12	By Depreciation A/c By Balance c/d	40,500 3,64,500
		4,05,000			4,05,000
1.4.12	To Balance b/d	3,64,500	31.3.13 31.3.13	By Depreciation A/c By Balance c/d	36,450 3,28,050
		3,64,500			3,64,500

Meghna Motor Co.

Dr. Cr.

Date	Particulars	Amount	Date	Particulars	Amount
1.4.10 31.3.11 31.3.11	To Bank A/c To Bank A/c To Balance c/d	1,20,000 1,20,000 2,40,000	1.4.10 31.3.11	By Motor Car A/c By Interest A/c	4,50,000 30,000
		4,80,000			4,80,000
31.3.12 31.3.12	To Bank A/c To Balance c/d	1,20,000 1,20,000	1.4.11	By Balance b/d	2,40,000
		2,40,000			2,40,000
31.3.13	To Bank A/c	1,20,000	1.4.12	By Balance b/d	1,20,00
		1,20,000			1,20,000

Interest Suspense Account

Dr. Cr.

Date	Particulars	Amount	Date	Particulars	Amount
1.4.10	To Meghna Motor Company	30,000	31.3.11	By Interest A/c By Balance B/d	16,500 13,500
		4,66,500			4,66,500
1.4.11	To Balance b/d	13,500	31.3.11	By Interest A/c By Balance C/d	11,325 2,175
		13,500			13,500
1.4.12	To Balance b/d	2,175	31.3.11	By Interest A/c	2,175
		2,175			2,175

5.(a) Duliajan head office sent out goods to its digboi branch at cost plus 25%. The branch remits all cash received to the head office and all expenses of the branch are met by the head office. From the particulars, prepare the following in head office books:

(i) Digboi Branch Account

(ii) Goods sent to Branch Account

Show Branch Debtors Account as a part of working note. 6+3+2=11

Stock at Branch on 1.4.2012 (invoice price) Rs.1800

Stock at Brach on 31.3.2013 (invoice price) Rs.2000

Goods sent to Branch during the year (Invoice Price) Rs.137500

Goods returned by the Branch (Invoice Price) Rs. 7500

Cash Sales Rs. 30000

Credit Sales Rs.99875

Goods returned by customer Rs. 4000

Discount and allowance to customers Rs.6000

Bad debts Rs. 500

Cash Received from customers Rs.104500

Cash sent to Branch:

For Salaries 10000

For Rent 2400

For Sundry Expenses 2500 Rs. 14900

Branch Debtors as on 1.4.2012 Rs. 24000

Solution:

In the books of Duliajan Head office

Digboi Branch A/c

Particulars	Amount	Particulars	Amount
To Opening balance Stock Debtors To Goods sent to branch 1,37,500 Less: Return by branch (7,500) To Bank Exp. Salaries 10,000 Rent 2,400 Sundry Exp. 2,500 To Stock reserve on (closing) () To General Profit	1,800 24,000 1,30,000 14,900 400 635	By Remittance Cash sales Collection from Debtors By Stock Reserve on (Opening) () By Goods sent to Branch () By Closing balance Stock Debtors	30,000 1,04,500 360 26,000 2,000 8,875
	1,71,735		1,71,735

Goods Sent to Branch A/c

Particulars	Amount	Particulars	Amount
To Branch Adjustment A/c To Digboi Branch A/c (Return) To Balance c/d	26,000 7,500 1,04,000	By Digboi Branch	1,37,500
	1,37,500		1,37,500

Branch Debtors A/c

Particulars	Amount	Particulars	Amount
To Opening balance To Credit sales	24,000 99,875	By Cash (Remittance) By Discount By Bad debt By Return (customer) By Closing balance	1,04,500 6,000 500 4,000 8,875
	1,23,875		1,23,875

(b) What is a “Branch”? What are the main objectives of maintaining Brach Accounts? How are inter-branch transactions recorded in a branch account? 2+5+4=11

Ans: Meaning of Branch and Branch Accounting

Branch: The dictionary meaning of the word branch is any subordinate division of a business, subsidiary shop, office etc. Acc to the provisions contained in sec29 of the Companies Act 1956 it would appear that a branch is any establishment carrying on either the same or substantially the same activity as that carried on by head office of the company.

A branch is a separate segment of a business. In order to increase the sales, business houses are requires to market their products over a larger territory and may generally split their business into certain divisions or parts. These various parts or divisions may be located in different part of the same city or in different cities of the same country or in different countries in the world. These are known as branches. The head office controls the activities of various branches.

Branch accounting: Branch accounting is the process through which the accounting system of a branch is maintained.

Objectives of Branch Accounting

The following are the main objects of maintaining branch accounts:

Profit or loss of each branch can be found out
They help in controlling branches
Actual financial position of the business can be found out on the basis of head office and branch accounting periods.
Branch requirements of goods and cash can be estimated.
Suggestions for increasing the efficiency of the branch can be sent on the basis of branch accounts.
They help in complying with the requirements of law because acc to companies act 2013.

Inter-Branch Transactions: Where there are number of branches, inter-branch transactions are likely to take place, e.g., cash or goods sent by one branch to another or expenses incurred by one branch on behalf of another. Such transactions are usually adjusted assuming that they were entered into under the instructions from the H.O. Suppose Kolkata branch transfers some goods to Mumbai branch under the directions of the H.O. The entries will be as follows:

1.	In the books of Kolkata Branch: Head Office A/c Dr To Goods Supplied to Branch A/c	XXX	XXX
2.	In the books of Mumbai Branch: Goods received from Branches A/c Dr To Head Office A/c	XXX	XXX
3.	In the books of Head Office: Mumbai Branch A/c Dr To Kolkata Branch a/c	XXX	XXX

Note: Inter-branch transactions without the knowledge of head office may be passed as between the branches only in the usual manner.

6. (a) (i) What is “Minimum Rent” in Royalty Account? Why is it important in Royalty Account? 3+3=6

Ans: Minimum Rent:

Minimum Rent is the amount below which landlord never accepts in any year from the person who has to pay royalty in case of mines. Minimum Rent is also known as Fixed Rent, Dead Rent, Flat Rent or Contract Rent. If in any year amount of royalty is less than the amount of minimum rent, the amount of minimum rent is payable by the person who has to pay the royalty, but if the amount of royalty is more than the amount of minimum rent, royalty will be paid.

Importance of Minimum Rent:

Fixation of minimum rent is in the interest of landlord because it guarantees him the receipt of the minimum rent even in the case of low output or sales. In the absence of minimum rent clause, only the actual royalty will be paid to the landlord. Moreover, it also gives incentive to the lessee to enhance production or sales because he is bound to pay minimum rent.

Redeemable Minimum Rent:

Generally, when minimum rent is more than royalty, then minimum rent is payable if no such provision is given in the agreement, but if it is mentioned in the agreement that when royalty will be more than minimum rent, the excess of minimum rent over royalty paid in the earlier years will be written off out of the excess of the royalty over minimum rent in the coming years such minimum rent is called Redeemable Minimum Rent.

(ii) What do you mean by “Recoupment of Shortworkings”? What conditions are to be satisfied for recoupment of shortworkings? 2+3=5

Ans: Recoupment of short working refers to recovering the short working of any year, from surplus royalty of the succeeding years. The right of recoupment of Shortworkings can be:

Restricted or Fixed period or
Unrestricted or Floating period.

When the lessee gets the right of recoupment of Shortworkings for a certain period (say first five years of the lease) commencing from the date of the royalty agreement, the right is said to be restricted or fixed. Any Shortworkings arising beyond this period cannot be reimbursed. But when the lessor allows the lessee to recoup any Shortworkings within two or three subsequent or following years, then the right is said to be unrestricted or floating because this can be availed of in any year when Shortworkings arises.

Conditions for Recoupment or Writing off Shortworkings:

Shortworkings can be recouped only when there is surplus. The Recoupment may be permitted over a stipulated period of time (fixed Recoupment) or over a specified period following the year of short working (floating Recoupment) or within the life time of the lease(Recoupment within life time of the lease). All the conditions regarding recoupment or writing off Shortworkings are based on the mutual agreement between the lessee and lessor. If Shortworkings could not be recouped within the agreed period, it will be transferred to profit and loss account in the year in which the right of recoupment is lost. By this process, Shortworkings account gets closed and will not appear as an asset in the balance sheet.

(b) Sri Mohini Baruah took a colliery from Sri Kitip Singh on lease for a period of 20 years from 1st April, 2008, on a royalty of Rs.16 per ton of coal raised with a dead rent of Rs.80000 p.a. and power to recoup shortworkings in the first four years of the lease. The annual coal raised were as follows:

Year	Output (in tons)
2008-09 2009-10 2010-11 2011-12 2012-13	3000 3500 5000 8000 10000

From the above particulars, prepare: (i) Royalties Account (ii) Kitip Singh’s Account and (iii) Shortworkings Account in the books of Sri Mohini Baruah. 4+4+3=11

Solution:

ANALYSIS OF ROYALTIES PAYABLE:

Year	Output	Royalty @ Rs. 16	M/R	Shortworking	Surplus	Recoupment	Written off	Payment
2008-09 2009-10 2010-11 2011-12 2012-13	3,000 3,500 5,000 8,000 10,000	48,000 56,000 80,000 1,28,000 1,60,000	80,000 80,000 80,000 80,000 80,000	32,000 24,000 - - -	- - - 48,000 80,000	- - - 48,000 -	- - - 8,000 -	80,000 80,000 80,000 80,000 1,60,000

Royalties A/c

In the books of Sri Mohini Baruah (Lessee)

Date	Particulars	Amount (Dr.)	Date	Particulars	Amount (Cr.)
31-3-09	To Kitip Singh	48,000	31-3-09	By Production A/c	48,000
		48,000			48,000
31-3-10	To Kitip Singh	56,000	31-3-10	By Production A/c	56,000
		56,000			56,000
31-3-11	To Kitip Singh	80,000	31-3-11	By Production A/c	80,000
		80,000			80,000
31-3-12 31-3-12	To Kitip Singh To Shortworking A/c	80,000 48,000	31-3-12	By Production A/c	1,28,000
		1,28,000			1,28,000
31-3-13	To Kitip Singh	1,60,000	31-3-13	By Production A/c	1,60,000
		1,60,000			1,60,000

Kitip Singh A/c

Date	Particulars	Amount (Dr.)	Date	Particulars	Amount (Cr.)
31-3-09	To Bank A/c	80,000	31-3-09 31-3-09	By Royalties A/c By Shortworking A/c	48,000 32,000
		80,000			80,000
31-3-10	To Bank A/c	80,000	31-3-10 31-3-10	By Royalties A/c By Shortworking A/c	56,000 24,000
		80,000			80,000
31-3-11	To Bank A/c	80,000	31-3-11	By Royalties A/c	80,000
		80,000			80,000
31-3-12	To Bank A/c	80,000	31-3-12	By Royalties A/c (1,28,000 – 48,000)	80,000
		80,000			80,000
31-3-13	To Bank A/c	1,60,000	31-3-13	By Royalties A/c	1,60,000
		1,60,000			1,60,000

Dr. Shortworking A/c Cr.

Date	Particulars	Amount (Dr.)	Date	Particulars	Amount (Cr.)
31-3-09	To Kitip Singh A/c	32,000	31-3-09	By Balance c/d	32,000
		32,000			32,000
1-4-09 31-3-10	To Balance b/d Ti Kitip Singh A/c	32,000 24,000	31-3-10	By Balance c/d	56,000
		56,000			56,000
1-4-10	To Balance b/d	56,000	31-3-11	By Balance c/d	56,000
		56,000			56,000
1-4-11	To Balance b/d	56,000	31-3-12 31-3-12	By Royalties A/c By P/L A/c	48,000 8,000
		56,000			56,000

7.(a). What do you mean by “amalgamation of firms”? What are the main objectives of amalgamation? What journal entries are required to pass for the closing the books of an amalgamating firm? 2+4+5=11

(b) The following is the Balance sheet of a partnership firm of Shiv, Shankar and Sambhu as on 31st March, 2013:

Liabilities	Amount	Assets	Amount
Capital: Shiv Shankar Sambhu Sundry Creditors	25000 20000 15000 10000	Land and Building Investments Sundry Creditors Cash at Bank	40000 10000 5000 15000
	70000		70000

The Firm was dissolved on 31st march, 2013 subject to the following conditions:

The creditors were paid off at a discount of 5%
Shiv agreed to take over the land and building at Rs.45000
Shankar agreed to take over the investments at 2500
Sambhu took over the debtors account at Rs.3000

Prepare (i) Realization account, (ii) Partners Capital Account, and (iii) Bank Account showing the effect of dissolution. 4+4+3=11.

Financial Accounting Solved Question Papers November' 2013, Dibrugarh University B.Com 1st Sem