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CMA Inter Gr. I (New Syllabus)(Solution of December - 2015)

Paper - 5: Financial Accounting

Chapter - 1 : Accounting Process2015 - Dec [2] (a)(i) Suspense A/c Dr.

To discount receivedTo discount allowed

(Being wrong debit to discount allowedcommission of recording discount received,now rectified)

1,4521,320

132

(ii) Krishan A/c Dr.Suspense A/c Dr.

To Kishan(Being wrong posting to Krishan’s A/c nowrectified)

20180

200

(iii) Sales A/c Dr.Purchase A/c Dr.

To N. KumarTo M. Kumar

50500

50050

(iv) Sales A/c Dr.P. Dass A/c Dr.

To MachineryTo C. Dass

60600

60060

1

Solved Scanner Appendix CMA Inter Gr. I Paper 5 (New Syllabus) 2

2015 - Dec [5] (a)The accounting entry passed by the accountant of the company is incorrectas it does not depict the original transactions sales should be shown at thegross amount and thereafter, entry of sales return should be passed.The goods returned cost 14,000 on which discount was availed which needs to be reversed. Discount =

= 2,240The correct entries should be:Narmada Ltd. Dr.Discount allowed Dr.

To SalesSales return Dr.

To Narmada Ltd.To Discount

Bank Dr.To Narmada Ltd.

84,00016,000

14,000

70,000

1,00,000

11,7602,240

70,000Balance of ` 2,240 is due from Narmada Ltd.

Chapter - 2 : Accounting Standards2015 - Dec [1] (a), (f)(a) Employer contribution = fair value of asset (end of year) - fair value of

assets (beginning of year)- Actual return + benefit payments.= 15,00,000 - 11,00,000 - 2,20,000 + 2,00,000 = 3,80,000

(f) As per As-9, dividends from investment is shares are not recognised inP/L until a right to receive payment in established.In the Present case, the dividend proposed on 10.4.2015, but thescheme was declared on 10.8.2015, thus it is quite clear that right toreceive payment is established on 10.8.2015. So income be recognisedfor the year ended 31.3.2015, the treatment accorded by Sea Ltd. isincorrect.


2015 - Dec [2] (c)Items Cost NRV Value per As - 2A 1,00,000 + 20,000

= 120,0001,50,000 - 10,000

= 1,40,000 1,20,000B 50,000 + 5,000

= 55,00050,000 - 5,000

= 45,000 45,000C 1,20,000 + 30,000

= 1,50,0001,80,000 - 20,000

= 1,60,000 1,50,0003,15,000

Value of stock as per As-2 is ` 3,15,000

Chapter - 3 : Reconciliation Statement2015 - Dec [2] (b)Statement showing balance of Volga Ltd.Goods sold on creditAdd:Less: Goods returned by customerPayment received in cashPayment received by cheques(9,80,000 - 1,45,000)Bills receivable issued(4,25,000 - 68,000)Discount allowedCredit note raised againstthe customerActual balanceAdd: goods returned & credit noteraised but not recordedbalance in books

25,00,000

2,10,0002,50,0008,35,000

3,57,000

21,000

10,5008,16,500

2,10,00010,26,500


Chapter - 4 : Accounting for Depreciation2015 - Dec [1] (b) Cost of Machinery.

Purchase price 5,50,000+ Installation charges 30,000+ Freight & cartage 5,000+ Insurance 10,000

5,95,000Depreciation =

=

= 1,09,800

Chapter - 6 : Preparation of Financial Statements of Not-for-ProfitOrganizations

2015 - Dec [3] (a)Green City Club Receipts & Payments A/c for the year ended 31.3.2015.

Receipts Amount Payments AmountTo bal b/d(balancing figure)To subscription (W. N. - 2)To entrance feesTo contribution forannual dinnerTo profit an annualsports

45,000

13,90,000

2,00,000

1,60,000

20,000

By salaries 4,80,000+ o/s at beg. 40,000- o/s at end 30,000By rentBy printing & stationeryBy travelling exp.By annual dinner exp.By secretary’s honorariumBy general expensesBy interest & bank chargesBy audit feesBy sports equipmentBy books & periodicals By bal c/d

4,90,0001,20,000

30,00060,000

1,40,0001,20,000

60,00018,00015,00035,00030,000

6,97,000


18,15,000 18,15,000

Balance sheet as on 31.3.2015Liabilities Amount Assets Amount

capital 11,80,000+ surplus 5,77,000o/s salaryo/s Audit fees.Bank loanSubscription received inadv.

17,57,00030,00020,000

1,00,000

140,000

20,47,000

freehold landsport equipmentcash at banko/s subscription

10,00,0002,70,0006,97,000

80,000

2,047,000

Working Notes:(1) Balance sheet as on 31.3.2014

Liabilities Amount Assets Amountcapital(b/f)Bank loanSalaries outstandingo/s Audit fees Subs. received in advance

11,80,0001,00,000

40,00015,00090,000

14,25,000

freehold landsports equipment o/s subscriptioncash at bank

10,00,0002,60,0001,20,000

45,000

14,25,000

(2) Calculation of Subscription received:


Subscription as per Income & expenditure A/cAdd: subscription received in adv. 31.3.2015Add: o/s subscription as on 31.3.2014Less: subscription received in adv. 31.3.2014Less: o/s subscription as on 31.3.2015

13,00,0001,40,0001,20,000

90,000 80,00013,90,000

Sports equipment

To bal. b/dTo bank(b/f)

2,60,00035,000

2,95,000

By depreciationBy bal. c/d

25,0002,70,000 2,95,000

Chapter - 8 : Partnership Accounts2015 - Dec [3] (c)

Revaluation A/c

FurnitureTo A 18,000

B 13,500C 13,500

15,000

45,00060,000

By Land & building 60,000

60,000

Partner’s capital accounts

To C’s heirTo bal c/d 3,90,000

3,90,000

3,90,000

3,90,000

1,93,500–

3,93,500

By bal b/dBy revaluation profit By bank

3,00,000

18,00072,000

3,90,000

1,50,000

13,5002,26,500

3,90,000

1,80,000

13,500

1,93,500

Partner’s current accounts

7


To G/WToDrawings To C’sheir

99,900

48,000

1,47,900

99,90072,000

1,71,900

–72,00034,290

1,06,2

90

By intt.on cap.By P/LBy G/WBy bal.c/d

15,000

49,800

79,920

3,1801,47,

900

7,50037,35

059,94

0

67,110

1,71,900

9,00037,35

059,94

0

1,06,2

90

To balb/dTo intt.C’sTo bal.c/d

3,1804,55574,01

581,75

0

67,1109,112

76,222

By intt.on cap.By P/LBy bal.c/d

15,000

66,750

81,750

7,50066,75

01,97276,22

2

--

-

C’s Heir A/cTo bal. c/d 2,41,457 By C’s cap.

By C’s current A/cBy intt.

1,93,50034,290

13,6672,41,457 2,41,457

Balance sheet as on 31.3.15Liabilities Amount Assets Amount

Capital A/cA 3,90,000B 3,90,000CreditorsC’s heir

7,80,00090,000

2,41,457

Land & buildingFurnitureStockDebtorsBank

3,00,00030,000

3,75,00060,000

4,18,500


A’s current A/c 74,01511,85,472

B’s current A/c 1,97211,85,472

Working NotesG/WAverage profits for 3 years

2011-122012-132013-142014-15

Less: Intt. onCapital @ 8%Less: Remuneration(75,000 × 3)

====

3,36,000/2 3,78,000 3,60,0003,12,000/2

= 3,54,000

62,400

G/W = 66,600 × 3 = 1,99,800

Chapter - 9 : Royalty Accounts2015 - Dec [1] (d) Royalty = 3,00,000 × 10%

= 30,000Minimum rent = 2,00,000Short workings = 1,70,000Payment to Landlord for 14 -15 = 2,00,000.

Chapter - 10 : Hire Purchase and Installment Purchase Accounts2015 - Dec [3] (b)

Shop stock A/cTo Goods repossessed To Purchases (b/f)

95,00071,65,000

By HP stockBy bal c/d

72,60,000


72,60,000 72,60,000

HP stock A/cTo Shop stockTo HP adj.

72,60,00023,10,00095,70,000

By HP debtorsBy bal. c/d

25,57,60070,12,40095,70,000

HP debtors A/cTo HP stock(balancing figure)

25,57,600

25,57,600

By cash By repossessed goodsBy bal. c/d

22,58,0001,31,600

1,68,000 25,57,600

Repossessed goods A/cTo Hp debtorTo HP adj.To HP adj.

51,80010,00033,200

95,000

By shop stock 95,000

95,000

Stock reserve A/cTo bal. c/d 16,92,721 By HP adj. 16,92,721

HP adj. A/cTo stock reserve To P/L

16,92,7216,60,479

By repossessed goodsBy repossessed goodsBy HP stock

10,00033,200

23,10,00023,53,200 23,53,200

Hire purchase price = Down payment + InstalmentLCD = 8,100 + 5,400 × 10


= 62,100Cash price = 56,700Refrigerator = 4,000 + 2,000 × 12

= 28,000Cash price = 24,000

Chapter - 11 : Branch Accounts2015 - Dec [1] (c)Opening stock (IP)+ Goods received by branchLess: sales - cash sales

credit sales (1,00,000 - 20%) Less: stock lost by fire

- 20%

Closing stock

12,000 1,38,000

3,000

21,000

46,000 80,000

Chapter - 13 : Self-Balancing Ledger and Sectional Balancing Ledgers2015 - Dec [1] (e)

Debtor’s ledger adj. A/c(In general ledger)To General ledger adj A/c(In debtor’s ledger A-M

General ledger adj. A/c(In debtors ledger N-Z)To Debtors ledger adj. A/c(In general ledger)

5,300

5,300

5,300

5,300

2015 - Dec [4] (a) In the books of Mr. PARDIWALA

Sales Ledger adjustment A/c in the General LedgerParticulars Amount Particulars Amount


To balance b/dTo General ledgeradj A/c (in sales Ledger)-sales (23,000 - 4,000)- B/R dishonoured- sundry charges

12,400

19,000300

20

31,720

By General ledgeradj A/c (in sales leger) - Cash received- B/R received- Returns inward- Bad debts- Transfer from bought ledgerBy balance c/d

18,5004,000

40050

150

8,62031,720

(b) In the books of M/S VIVAIN & CO.Total creditors A/c is General ledger

Particulars Amount Particulars Amount

To General ledgeradj A/c

- B/P accepted- Cash paid- Purchase returns- Discount received- Transfer from debtors ledger- B/R endorsedTo bal. c/d

62,0001,37,000

11,0006,000

7,00016,000

1,56,0003,95,000

By balance b/dBy General ledger adj A/c

- Purchases- B/P dishonoured- Endorsed B/R

dishonoured

1,25,000

2,67,000

3,000

3,95,000

(c) (i) Meena’s A/c

To MeenuDr. 8,700

8,700(ii) Suspense A/c

To P/L adjustment A/cDr. 1,000

1,000(iii) M/S BPO Ltd.

To P/L adjustment A/cDr. 15,600

15,600


Chapter - 14 : Accounting for Service Sectors2015 - Dec [5] (b), (c)(b) Amount of foreseeable loss:

Total cost of construction (1400 + 400 +700) = 2,500 Less: Total contract price 2,000 Total foreseeable loss to be recognised as expenses 500 As per As- 7, when it is probable that total contract costs will exceedtotal contract revenue, the expected loss should be recognised as anexpense immediately.Contract work-in-progress:Work certified 1,400Work not certified 400

1,800Proportion of total contract value recognised as revenue.% of work =

= 72%= 2,000 × 72%= 1,440

Amount due from customers.Contract cash + recognised profits – recognised losses – progresspayments received + progress payments to be received.

= 1,800 + 0 - 500 - 1,000 + 200 = 500 lakhs.

This will be shown as liability in B/s.

Relevant disclosures:(` in lakhs)


Contract revenueContract expensesRecognised profits less loss RetentionsGross amount due from customers

1,4401,800(500)

200500

(c) The minutes of usage (MOU) is the total duration of minutes for whicha customer uses a telecommunication network during a given month. Inthe nascent days of mobile telecommunication in India, airlines rateswere very high and a customer had to pay for incoming calls as well.During those days, the MOU ranged from 110 to 150 minutes permonths, as customers were wary of making calls.However with falling rates, the MOU has steadily reduced. As onSeptember 2005, the blended MOU was in the range of 367 minutessignifying a multi fold increase in network utilisation.The MOU is also analyzed between prepaid and postpaid services andfurther drilled down between incoming and outgoing. In the currentbilling system, a customers does not pay for incoming calls. However,incoming calls being in revenue for a telecom operator in the form of IUCcharges paid by other service providers for terminating calls.

Chapter - 15 : Bills of Exchange2015 - Dec [1] (g)

In the books of Kuntal1.4.15

1.4.15

4.7.15

B/R Dr.To Aloke

Chinu Dr.To B/R

Aloke Dr.To Chinu

5,000

5,000

5,000

5,000

5,000

5,000

2015 - Dec [6] (b)In the books of Gouru


1.4.15

4.4.15

4.4.15

4.7.15

4.7.15

7.9.15

7.9.15

B/R Dr.To Gyani

Bank A/c Dr.Discount A/c Dr.

To B/RGyani Dr.

To bankTo discount

Gyani Dr.To B/P

Discount A/c Dr.Bank A/c Dr.

To GyaniB/P Dr.

To GyaniGyani A/c Dr.

To bankTo deficience

2,00,000

1,92,500 7,500

1,00,000

1,20,000

50019,500

1,20,000

1,20,000

2,00,000

2,00,000

96,250 3,750

1,20,000

20,000

1,20,000

48,00072,000

In the books of Gyani

1.4.15

4.4.15

4.7.15

4.7.15

4.7.15

7.9.15

Gouru Dr.To B/P

Bank A/c Dr.Discount A/c Dr.

To GouruB/R Dr.

To GouruBank Dr.Discount Dr.

To B/RGouru Dr.

To bankTo discount

Gouru Dr.

2,00,000

96,250 3,750

1,20,000

1,17,0003,000

20,000

1,20 ,000

2,00,000

1,00,000

1,20,000

1,20,000

19,500500


7.9.15

7.9.15

To bankB/P Dr.

To bankBank Dr.Bad debts Dr.

To Gouru

2,00,000

48,00072,000

1,20,000

2,00,000

1,20,000

In the books of GouruGyanies A/c

To bankTo discountTo B/PTo bankTo deficiency

96,2503,750

1,20,00048,000

72,0003,40,000

By B/RBy discountBy bankBy B/P

2,00,000500

19,5001,20,000

3,40,000

16

Chapter - 17 : Joint Venture2015 - Dec [6] (c)

Memorandum joint venture A/cParticulars Amount Amount Particulars Amount Amount

To Mitrik : Cost of sharesTo Jiban: Stamp charges

AdvertisingCar expensesPrinting charges

To Mitrik : Rent Solicitor’s chargesTo Profit on ventures:To JibanTo Mitrik

1,65,0001,35,0001,54,0001,88,0001,30,000 80,000

12,32,000 6,16,000

12,00,000

6,42,000

2,10,000

18,48,00039,00,000

By Jiban: commissionBy Mitrik :commissionBy Mitrik: saleBy Jiban: sale

90,000 60,00012,50,00025,00,000

39,00,000

In the books of JibanJoint venture with Mitrik A/c

To bank (expenses)

To share of profitTo bank (remittance)

6,42,000

12,32,000 7,16,000

25,90,000

By bank (commission )By bank (sales)

90,00025,00,000

25,90,000

17


Chapter - 20 : Investment Accounts2015 - Dec [6] (a)

Investment A/c Equity Shares in Pivotals Ltd.

Date Particulars

No.of

shares

Div

Amount

Date Particulars No.of

shares

Div

Amount

1.4.141.9.142.11.1410.11.14

To bal.b/dTo bankTo bonusshareTo bank(rightshares)

20,0005,0005,0005,000

35,000

----

3,20,000

70,000-

75,000

4,65,000

31.12.141.2.1

4

31.3.14

31.3.14

By bankBy bank (saleat 13 per share)By P/L losson saleBy bal. c/dBy P/L

20,000

15,000

35,000

7,500

2,60,000

1,429

1,95,000

1,071

4,65,000

Shares has been assumed ex- rightProceed from sale of right

5000 × 1.5 = 7500Investment are valued at cost or NRV whichever is lows.

Chapter - 21 : Insurance Claims2015 - Dec [1] (h)Claim to be lodged =


Salvaged stock ×

= 90,000 ×

= 45,000

Chapter - 22 : Accounts of Banking Companies2015 - Dec [1] (i)

Rebate on bills discounted.Due date Days after Discount Amount

90,00060,000

18.6.1513.615

110105

8%9%

2,1701,5533,723

2015 - Dec [7] (b)Rebate on bills discounted

Due date Days after31.3.15

Discountrate

Amount

2,50,000 1,50,000 2,00,000 3,00,000

8.6.1513.6.1528.6.1523.6.15

69748984

10%9%9%8%

4,7262,7404,389

5,52317,378

Rebate on bills discounted A/c Dr.To discount on bills A/c

Bills A/c Dr.To discount A/cTo client A/c

Discount on bills A/c Dr.To Rebate on bills discounted A/c

Discount on bills A/c

44,320

9,00,000

17,378

7,15,526

44,320

2,11,4166,88,584

17,378


To P/L A/c 7,15,526

Chapter - 23 : Accounts of Electricity Companies2015 - Dec [7] (c) (i), (ii)

(i) Computation of Depreciation:Particulars 1st year

2012-132nd year

2013-143rd year2014-15

Opening capital cost (A)Additional capital cost (B)Closing capital cost

(A+B) (c)Average capital cost(A+C/2)weighted average rate ofdepreciationAnnualised depreciationAdvance againstdepreciationTotal Depreciation

10,00,000 70,00010,70,000

10,35,000

5.20%53,820

6,180 60,000

10,70,000 20,00010,90,000

10,80,000

5.20%56,160

13,840 70,000

10,90,000 15,000

11,05,000

10,97,500

5.20% 57,070

12,930

70,000Computation of advance against depreciation:

2012-13 2013-14 2014-15Repayment of loan (A)Depreciation (B)Difference (A-B) (C)cumulative payment of loan (D)cumulative Dep(E)Difference (D-E) (F)Advance against depreciation(Min of c & f)

60,00053,820 6,18060,00053,820 6,180

6,180

70,00056,160

13,8401,30,0001,09,980 20,020

13,840

70,000 57,070 12,9302,00,000

1,67,050 32,950

12,930

(ii) An immediate shift to the optimized Depreciated Replacement cost(ODRC) method is not recommended due to-


– Problems in producing a detailed asset register.– Absence of norms for standard lives of assets.– Absence of construction cost estimates.– Lack of data on future load growth.

Chapter - 24 : Accounts of Insurance Companies2015 - Dec [1] (j)Balance of funds as on 31.3.2015 = 42,08,400Add:

Premium o/s = 8,110Less: 42,16,510

claims o/s 22,050claims covered under re-insurance 12,000 10,050Balance of life assurance fund 42,06,460

2015 - Dec [7] (a)Heaven Fire Insurance Co. Ltd

Revenue A/c for the year ending 31st march, 2015.

Particulars Sed. No `

Premium received (Net)change in provision for unexpired

Income from Investments riskTotal (A)

claim incurredcommission Management expenses

Total (B)operating loss (A-B)

1

2

1,110 361,146

479 250

150 879

267

Schedule - 1 Premium Earned


Premium earnedLess: Premium ended on reinsurance

Net premium

1,200 90

1,110

Schedule - 2 Claims incurredClaims paidAdd: o/s claims as on 31.3.15Less: o/s claims as on 31.3.14

Add: Legal expenses regarding claim

44070

(40)470 9479

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