ECO – 14: Accountancy – II, For July 2019 and January 2020 admission cycle
Attempt all the questions.
1. What are the three systems of maintaining the accounts of a dependent branch and describe how is profit ascertained under each system? Explain how a branch stock account helps in keeping effective control over the branch stock? (20)
2. Jalani Distributors sold three light commercial vans to Jain Enterprises on January 1, 2017, on hire purchase system. The price of each van was Rs. 90, 000 payment of which was to be made as follows:
(i) Rs. 30, 000 as a down payment for each van
(ii) Remaining amount in 3 equal instalments along with interest @15%
Jain Enterprises were charging depreciation @ 20% each year on the written down value method. After payment of the first instalment as on December 31, 2017, they could not pay further instalments. It was agreed between the parties for repossession of two vans adjusting their values against the amount due. For the purpose of repossession, depreciation @ 30% p.a. was charged.
Repossessed goods were repaired at a cost Rs. 2,000 and were then sold for Rs. 92,000.
Calculate the value of repossessed stock and show the necessary accounts in the books of both parties. (20)
3. (a) Explain how is goodwill treated when the incoming partner does not bring his share of goodwill in cash?
(b) How will you work out the new capital of each partner if the capital is to be adjusted in the new profit sharing ratio? Give Examples. (10+10)
4. XYZ Ltd. issued 1, 50,000 equity shares of Rs. 10 each at a premium of Rs. 2 per share payable Rs. 3 on the application, Rs. 5 on the allotment (including premium) and balance in two calls of an equal amount.
Applications were received for Rs. 2, 00,000 shares and pro-rata allotment was made to all the applicants. The excess application money was adjusted towards allotment.
Mahesh, who was allotted 400 shares failed to pay the 1st and 2nd call and his shares were forfeited after the second call. Pass the necessary journal entries in the books of XYZ Ltd. and also show the Balance sheet. (20)
5. “Return on investment is considered to be the master ratio which reflects the overall performance of the firm” Elucidate. (20)