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NEW SCHEME – MAY 2023
CA INTER - GROUP 1
PAPER 1 - ACCOUNTING
SYLLABUS 30%
QUESTION PAPER
Roll No. ………………………
Total No. of Questions - 5 Total No. of Printed Pages –
Time Allowed – 3 hours Maximum Marks – 100
GENERAL INSTRUCTIONS TO CANDIDATES
1. Question paper comprises 5 questions. Since this is a 30% syllabus paper, there have
been no optional questions given in the paper. Hence all questions are mandatory.
2. Working Notes should form part of the answer.
3. Answers to the questions are to be given only in English except in case of candidates who
have opted for Hindi Medium. If a candidate has not opted for Hindi Medium, his/her
answers in Hindi will not be evaluated.
4. Duration of the examination is 3 hours.
PREPCA sets papers as per ICAI Paper Pattern.
However, we do make changes necessitated by our experts since there is no
fixed pattern that ICAI follows.
ACC 30%
(1) Question 1(a) 5
PREPCA Eduserv Private Limited had 5,000 10% Redeemable Preference Shares of ₹ 100
each, fully paid up. The company had to redeem these shares at a premium of 10%.
It was decided by the company to issue the following:
(i) 35,000 Equity Shares of ₹ 10 each at par
(ii) 2,000 13% Debentures of ₹ 150 each.
The issue was fully subscribed and all accounts were received in full. The payment was duly
made. The company had sufficient profits. Show journal entries in the books of the company.
Question 1(b) 5
Following are the balances that appear in the trial balance of Raj Ltd. as at 2022:
Issued and Subscribed Capital-
1,00,000 Equity Shares of ₹ 10 each ₹ 8 paid up – 8,00,000
10,000; 10% Preference Shares of ₹ 10 each fully paid – 1,00,000
Reserves and Surplus:
General Reserve – 2,40,000
Securities Premium (collected in cash) – 25,000
Profit and Loss Account – 1,20,000
On 1st April, 2022 the company has made final call @ ₹ 2 each on 1,00,000 Equity Shares. The
call money was received by 15th April, 2022. Thereafter the company decided to issue bonus
shares to equity shareholders at the rate of 1 share for every 5 shares held and for this purpose, it
decided that there should be minimum reduction in free reserves. Pass Journal entries.
Question 1(c)
Explain the conditions when a company should issue new equity shares for redemption of the 5
preference shares. Also discuss the advantages and disadvantages of redemption of preference
shares by issue of equity shares.
Question 1(d)
Aarohi Ltd. was incorporated on 1st July, 2021 to acquire a running business of Adarsh Sons 5
with effect from 1st April, 2021. During the year 2021-22, the total sales were ₹24,00,000 of
which ₹4,80,000 were for the first six months. The Gross profit of the company ₹3,90,800. The
expenses debited to the Profit & Loss Account included:
(i) Director's fees ₹30,000
(ii) Bad debts ₹7,200
(iii) Advertising ₹24,000 (under a contract amounting to ₹2,000 per month)
(iv) Salaries and General Expenses ₹1,28,000
(v) Preliminary Expenses written off ₹10,000
(vi) Donation to a political party given by the company ₹10,000.
Prepare a statement showing pre and post-incorporation profit for the year ended 31st March,
2022.
ACC 30%
Question 2(a) 8
M/s. Damini is a Departmental Store having three departments X, Y and Z. The information
regarding three departments for the year ended 31st March, 2022 are given below:
Particulars X Y Z
Opening Stock 18,000 12,000 10,000
Purchases 66,000 44,000 22,000
Debtors at end 7,500 5,000 5,000
Sales 90,000 67,500 45,000
Closing Stock 22,500 8,750 10,500
Value of furniture in each Department 10,000 10,000 5,000
Floor space occupied by each Dept. (in sq. ft.) 1,500 1,250 1,000
Number of employees in each Department 25 20 15
Electricity consumed by each Department (in 300 200 100
units)
Additional Information:
Particulars Amount (Rs.)
Carriage inwards 1,500
Carriage outwards 2,700
Salaries 24,000
Advertisement 2,700
Discount allowed 2,250
Discount received 1,800
Rent, Rates and Taxes 7,500
Depreciation on furniture 1,000
Electricity Expenses 3,000
Labour welfare expenses 2,400
Prepare Departmental Trading and Profit & Loss Account for the year ended 31 st March, 2022
after providing provision for Bad Debts at 5%.
Question 2(b) 12
The Books of Vanraj Ltd. shows the following Balances as on 31st December, 2019:
Particulars Amount
6,00,000 Equity shares of Rs. 10 each fully paid up 60,00,000
30,000, 10% Preference shares of Rs. 100 each, Rs. 80 paid up 24,00,000
Securities Premium 6,00,000
Capital Redemption Reserve 18,00,000
General Reserve 35,00,000
Under the terms of issue, the Preference Shares are redeemable on 31st March, 2020 at a premium
of 10%. In order to finance the redemption, the Board of Directors decided to make a fresh issue
of 1,50,000 Equity shares of Rs.10 each at a premium of 20%, Rs. 2 being payable on application,
Rs. 7 (including premium) on allotment and the balance on 1st January, 2021. The issue was fully
subscribed and allotment made on 1st March, 2020. The money due on allotment was received
ACC 30%
by 20th March, 2020. The preference shares were redeemed after fulfilling the necessary
conditions of Section 55 of the Companies Act, 2013.
You are required to pass the necessary Journal Entries and also show how the relevant items will
appear in the Balance Sheet of the company after the redemption carried out on 31st March,
2020.
Question 3(a) 15
Anuj Ltd. (an unlisted company other than AIFI, Banking company, NBFC and HFC) had 8,000,
9% debentures of Rs. 100 each outstanding as on 1st April, 2019, redeemable on 31st March,
2020.
On 1st April, 2019, the following balances appeared in the books of accounts:
• Investment in 1,000, 7% secured Govt. bonds of Rs. 100 each, Rs. 1,00,000.
• Debenture Redemption Reserve is Rs. 50,000.
Interest on investments is received yearly at the end of financial year.
1,000 own debentures were purchased on 30th March, 2020 at an average price of Rs.96.50 and
cancelled on the same date.
On 31st March, 2020, the investments were realized at par and the debentures were redeemed.
You are required to write up the following accounts for the year ended 31st March, 2020.
(1) 9% Debentures Account.
(2) Debenture Redemption Reserve Account.
(3) DRR Investment Account.
(4) Own Debentures Account.
Question 3(b) 5
Omega company offers new shares of Rs. 100 each at 25% premium to existing shareholders
on the basis
one for five shares. The cum-right market price of a share is Rs. 200.
You are required to calculate the
(i) Ex-right value of a share;
(ii) Value of a right share?
Question 4(a) 10
P Ltd. has two Departments X and Y. From the following particulars you are required to prepare
Departmental Trading Account and Combined Trading and P & L Account for the year ending
31st March, 2022.
Particulars Department X Department
Rs. Y
Rs.
Opening stock (at Cost) 70,000 54,000
ACC 30%
Purchase 2,14,000 1,66,000
Carriage inwards 6,000 6,000
Wages 21,000 24,450
Sales 3,10,000 2,54,000
Purchased goods transferred by Dept. Y to Dept. X 30,000 -
Purchased goods transferred by Dept. X to Dept. Y - 24,000
Finished goods transferred by Dept. Y to Dept. X 80,000 -
Finished goods transferred by Dept. X to Dept. Y - 1,00,000
Return of Finished Goods by Dept. Y to Dept. X 25,000 -
Return of Finished Goods by Dept. X to Dept. Y - 17,000
Closing Stock of Purchased Goods 12,000 15,000
Closing Stock of Finished Goods 60,000 35,000
Purchased goods have been transferred mutually at their respective departmental purchase cost
and finished goods at departmental market price and that 20% of the finished stock (closing) at
each department represented finished goods received from the other department.
Question 4(b) 10
The partners of Suhani converted their partnership firm into a Private Limited Company named
Smriti (P) Ltd. w.e.f 1st January, 2020 which was incorporated on 1st June, 2020. The purchase
consideration amounting to Rs. 11,40,000 was payable later on an interest of 12% per annum. To
make the payment of purchase consideration and meet working capital requirements a loan worth
Rs. 17,10,000 @ 10% per annum was availed on 1st June, 2020 & payment for purchase
consideration was made. The company obtained a building on lease at a monthly rent of Rs.
19,000 on 1st July, 2020. Following is the information of the company as on 31st March, 2021
(for the period of 15 months):
Rs. Rs.
Sales 37,62,000
Less:
Cost of goods sold 22,57,200
Discount 87,780
Director’s remuneration 1,14,000
Salaries 1,71,000
Rent 2,56,500
Interest 1,99,500
Depreciation 57,000
Office Expenses 1,99,500
Sale Promotion Expenses 62,700
Preliminary Expenses 28,500 (34,33,680
)
Profit
3,28,320
Sales between June 2020 and December, 2020 were 2 ½ times of the average sales, which further
increased
to 3½ times in January to March quarter, 2021. The salaries from July, 2020 doubled. Prepare a
statement
showing the calculation of profits or losses for the pre-incorporation and post-incorporation
ACC 30%
periods.
Question 5 20
The following is the summarized Balance Sheet of Rukmani Limited as at 31st March, 2022:
Liabilities Rs.
Authorized Capital
1,50,000 Equity shares of Rs. 10 each 15,00,000
30,000 10% Redeemable Preference shares of Rs. 100 each 30,00,000
45,00,000
Issued, Subscribed and Paid up
90,000 Equity shares of Rs. 10 each 9,00,000
15,000 10% Redeemable Preference shares of Rs. 100 each 15,00,000
Reserves & Surplus
Securities Premium 18,00,000
General Reserve 16,50,000
Profit & Loss A/c 1,20,000
7500, 9% Debentures of Rs. 100 each 7,50,000
Trade Payables 2,12,500
69,32,500
Assets
Non-Current Assets
Property Plant & Equipment 31,60,000
Investments (Market Value, Rs. 17,40,000) 14,70,000
Trade Receivables 17,60,000
Cash & Bank Balance 5,42,500
69,32,500
In Annual General Meeting held on 15th May, 2022 the company passed the following
resolutions:
(i) To redeem 10% preference shares at a premium of 5%.
(ii) To redeem 9% Debentures by making offer to debenture holders to convert their holding into
equity shares at Rs. 40 per share or accept cash on redemption.
(iii) To issue fully paid bonus shares in the ratio of one equity share for every three shares held
on 31st March, 2022.
(iv) Redemption of preference shares and debentures will be paid through company’s cash &
bank balance
subject to leaving a minimum cash & bank balance of Rs. 2,00,000.
(v) To issue sufficient number of equity shares @ Rs. 40 per share if required to finance
redemption of Preference Shareholders and debenture holders.
On 5th June, 2022 investments were sold for Rs. 16,80,000 and preference shares were redeemed.
30% of Debenture holders exercised their option to accept cash and their claims were settled on
ACC 30%
1st August, 2022. The bonus issue was concluded by 10th August, 2022.
You are requested to journalize the above transactions including cash transactions and prepare
Balance
Sheet as at 30th September, 2022. All working notes should form part of your answer.
ACC 30%
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