DISTANCE EDUCATION
B.B.A. /B.B.A. (Lateral) DEGREE EXAMINATION,
MAY 2018.
ADVANCED ACCOUNTANCY
(2005 onwards)
Time Three hours Maximum 100 marks
SECTION A — x 8 40 marks)
Answer any FIVE questions.
1. How is goodwill treated in the books of accounts on the
retirement of a partner?
2. What is 'Realisation account'? Differentiate it from
'Revaluation
3. You are required to set out the journal entries relating to
the issue of the following debentures in the books of X
Ltd.
120 Rs. 1,000 debentures are issued at
discount and are repayable at par
Another 150 Rs. 1,000 debentures are issued at
discount and repayable at 10% premium.
Further 80, Rs. 1,000 debentures are issued at
premium.
4. How are profits prior to incorporation dealt with?
5. Define Amalgamation and external reconstruction.
6. How will you ascertain the claim for loss of profit as a
result of fire?
7. Write a note on stock and debtors system.
8. What do you mean by dissolution of a firm?
Sub. Code
24
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SECTION B — × 15 60 marks)
Answer any FOUR questions.
9. X,Y and Z are equal partners of a trading firm. The
capital of the firm is Rs. 1,20,000 held equally by the
partners.
The firm taken out a policy of Life Assurance for
Rs. 36,000 on the joint lines of the partners, payable on
the death of any one of them.
X and Y were entitled to be credited at the close of
each year with partnership salaries of Rs. 3,600 and
Rs. 3,200 respectively.
Partners were to be charged interest on their
drawings and were to be allowed interest on
their capital.
In the event of death of a partner, goodwill was to
be valued at one year's purchase of average profits
of the three years preceeding the death . Y died on
31.12.91. His drawings during 1991 amounted to
Rs. 4,000 and interest thereon Rs. 120. The profit of
the three years preceeding the death were
1989 Rs. 40,000 1990 Rs. 6,400 (Loss)
1991 Rs. 20,400.
Prepare current a/c and capital a/c as they
would appear in the books of the firm after receipt
of the assurance policy money.
10. A,B and C were partners who share profits in the ratio of
3:2:1. On 31.12.2005, the position of the firm is as follows:
Liabilities Rs. Assets Rs.
Capital accounts
A 40,000Plant and machinery 87,400
B 32,000 Joint life policy 8,000
C 16,000Stock 39,600
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Reserve fund 24,000 Debtors 30,000
loan 20,000 Less provision 2,000 28,000
Bills payable 7,200 Cash at bank 7,000
Sundry creditors 30,800
1,70,000 1,70,000
The firm was dissolved on 1.1.96. Joint life policy was
taken over by A at Rs. 10,000. Stock realised Rs. 36,000.
Debtors realised Rs. 29,000. Plant and machinery fetched
Rs. 72,000. One bill for Rs. 1,400 under discount having
been dishonoured had to be taken up by the firm
(the debt subsequently proved bad) close the books of the
firm.
11. New Comer Ltd. issued 50,000 equity shares of Rs. 10
each payable as Rs. 3 on application Rs. 4 on allotment
and Rs. 3 or call. Applications were received for 80,000
equity shares, out of which letters of regret were issued
for 15,000 shares. Full allotment was made to applicants
for 20,000 shares. Pro rata allotment was made on the
balance. A shareholder holding 50 shares to whom full
allotment was made failed to pay allotment money.
Another shareholder 100 shares to whom pro rata
allotment was made also failed to pay allotment money.
On the call, there was further default of 150 shares. All
shares were forfeited. The first lot of 150 shares was
reissued Rs. 8 per share as fully paid up shares. Pass
appropriate journal entries in the books of New Comers
Ltd.
12. Flat Pvt Ltd. was incorporated on 1st July 2002 to take
over the running business of Mr. Round with effect from
1st April 2002. The following P and L a/c for the year
ended 31st March 2003 was drawn up.
Rs. Rs.
To commission 2,625 By gross profit 98,000
To advertisement 5,250 By bad debts realised 500
To M.D's remuneration 9,000
To depreciation 2,800
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To salaries 18,000
To insurance 600
To preliminary expenses 700
To rent and taxes 3,000
To discount 350
To bad debts 1,250
To net profit 54,925
98,500 98,500
The following details are available
The average monthly turnover from July 2002
onwards was double than that of the previous
months.
Rent for the first 3 months was paid Rs. 200 p.m
and there after at a rate increased by Rs. 50 p.m.
Advertisement expenses were directly proportionate
to the sale.
You are required to find out the profit prior to
incorporation and state the treatment thereof in the
books of the company.
13. Explain the meaning of reconstruction of company.
14. What do you mean by the value of business?
15. What do you mean by "royalty"? Point out the importance
of minimum rent in the royalty agreement.