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 NEW SCHEME – MAY 2023
CA INTER - GROUP 1
PAPER 1 - ACCOUNTING
SYLLABUS 70%
QUESTION PAPER
Roll No. ………………………
Total No. of Questions - 5 Total No. of Printed Pages – 9

Time Allowed – 3 hours Maximum Marks – 100

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1. Question paper comprises 6 questions. Question 1 is mandatory and attempt any 4
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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
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ACC 70%
(1) Question 1(a) 14
The following is the Balance Sheet of Chamcha as on 31st March, 2020:

Liabilities Rs. Assets Rs.

Capital Account 48,000 Building 32,500
Loan 15,000 Furniture 5,000
Creditor 31,000 Motor car 9,000
Stock 20,000
Debtors 17,000
Cash in hand 2,000
Cash at bank 8,500
94,000 94,000

A riot occurred on the night of 31st March, 2021 in which all books and records were lost.
The cashier had absconded with the available cash. He gives you the following information:

(a) His sales for the year ended 31st March, 2021 were 20% higher than the previous
year’s sales. He always sells his goods at cost plus 25%; 20% of the total sales for
the year ended 31st March, 2021 were for cash. There were no cash purchases.

(b) On 1st April, 2020 the stock level was raised to Rs. 30,000 and stock was maintained
at this new level all throughout the year.

(c) Collection from debtors amounted to Rs. 1,40,000 of which Rs. 35,000 was received
in cash, Business expenses amounted to Rs. 20,000 of which Rs. 5,000 was
outstanding on 31st March, 2021 and Rs. 6,000 was paid by cheques.

(d) Analysis of the Pass Book revealed the Payment to Creditors Rs. 1,37,500, Personal
Drawing Rs. 7,500, Cash deposited in Bank Rs. 71,500, and Cash withdrawn from
Bank Rs. 12,000.

(e) Gross profit as per last year’s audited accounts was Rs. 30,000.

(f) Provide depreciation on Building and Furniture at 5% and Motor Car at 20%.

(g) The amount defalcated by the cashier may be treated as recoverable from him.

You are required to prepare the Trading and Profit and Loss Account for the year ended 31st
March, 2021 and Balance Sheet as on that date.

Question 1(b) 6
L Ltd. has its head office at Mumbai and two branches at Pune and Goa. The branches
purchase goods independently. Pune branch makes a profit of one third on cost and Goa
branch makes a profit of 20% on sales. Goods are also supplied by one branch to another at
the respective sales price. From the following particulars, prepare the Trading and Profit and
Loss Account of Pune branch and find out the profit or loss made by it considering the reserve
ACC 70%
for unrealised profits:

Particulars Pune Branch Goa Branch

Rs. Rs.
Opening Stock 40,000 30,000
Purchases (Including Inter Branch transfers) 2,00,000 2,50,000
Sales 2,80,000 2,95,625
Chargeable Expenses 15,000 27,500
Closing Stock 30,000 43,500
Office and Administration Expenses 13,250 7,000
Selling and Distribution Expenses 15,000 10,000

Information:
(i) Opening stock at Pune Branch includes goods of Rs. 10,000 (invoice price) taken from
Goa Branch,
(ii) Opening stock at Goa Branch includes goods of invoice price Rs. 17,000 taken from
Pune Branch,
(iii) The Pune Branch sales includes transfer of goods to Goa Branch at selling price Rs.
20,000
(iv) The sales of Goa Branch include transfer of goods to Pune Branch at selling price Rs.
15,000.
(v) Closing stock at Pune Branch includes goods received from Goa Branch (invoice price
Rs.5,000.
(vi) Closing stock at Goa Branch includes goods of Rs. 4,000 (invoice price).

Question 2(a)
Ram, Dev and Datar sons of Prabhu Dyal are running Punya Hotel in Chennai. Ram is heading 12
Room division (A), Dev is heading banquet division (B) and Datar is heading Restaurant
division (C). Each of the three brothers would receive 60% of the profits, if any, of the
department of which he was incharge and remaining combined profits would be shared in
2:2:1 ratio. The following is the Trading and Profit and Loss Account of the firm for the year
ended March 31,2021:

(Rs.) (Rs.) (Rs.) (Rs.)

To Opening Stock: By Sales:
Room (A) 25,650 Room (A) 2,70,00
0
Banquet (B) 18,000 Banquet (B) 1,65,00
0
Restaurant (C) 19,500 63,150 Restaurant (C) 86,700 5,21,700
To Purchases: By Discount 1,650
Room (A) 2,35,00 received
0
Banquet (B) 1,56,00 By Closing
0 Stock:
Restaurant (C) 84,200 4,75,20 Room (A) 55,300
0
To Salaries 34,400 Banquet (B) 31,800
To Royalties 8,000 Restaurant (C) 42,500 1,29,600
To Parking fee
& car washing 9,600
charges
ACC 70%
 To Discount allowed 2,500
To Misc. Exp. 7,000
To Depreciation 1,160 62,660
To Net Profit 51,940
Total 6,52,95 Total 6,52,950
0

Prepare:

(I) Departmental Trading and Profit and Loss Account along with combined Profit & Loss
account and
(II) Profit and Loss Appropriation Account after incorporating the following information:

(i) Closing stock of Dept. B includes goods amounting Rs. 3,500 being transferred from Dept.
A

(ii) Stock value Rs. 9,300 and other goods of the value of Rs. 1,500 were transferred at selling
price by Departments A and C respectively to Department B.

(iii) The details of salaries were as follows:

(1) Admin Office 60%, Pantry 40%
(2) Allocate Admin Office in the proportion of 3: 2:1 among the Departments A, B, C
(3) Distribute Pantry expenses equally among the Department A and B.

(iv) The parking fee is ‘ 500 per month which is to be divided equally between Departments
A, B & C.

(v) All other expenses are to be allocated in ratio of 2:2:1.

(vi) Discounts received are to be credited to the three Departments as follows: A : Rs. 650; B
: Rs. 600; C : Rs. 400.

(vii) The opening stock of Department B does not include any goods transfer red from other
departments and closing stock of Department B does not include any stock transferred from
Department C.

Question 2(b)
Arwind Ltd. has a retail shop under the supervision of a manager. The ratio of gross profit at 8
selling price is constant at 25 per cent throughout the year to 31st March, 2020.

Branch manager is entitled to a commission of 10 per cent of the profit earned by his branch,
calculated before charging his commission but subject to a deduction from such commission
equal to 25 per cent of any ascertained deficiency of branch stock. All goods were supplied to
the branch from head office

The following details for the year ended 31st March, 2020 are given as follows:

Rs. Rs.
Opening Stock (at cost) 74,736 Chargeable expenses 49,120
Goods sent to branch (at cost) 2,89,680 Closing Stock (Selling Price) 1,23,32
8
ACC 70%
 Sales 3,61,280
Manager’s commission paid
on account 2,400

From the above details, you are required to calculate the commission due to manager for the
year ended 31st March, 2020.

Question 3(a) 10
Prism Ltd. was incorporated on 01.07.2020 to take over the existing business of Rich & Co.
with effect from 01.04.2020. Date of closing books of accounts is 31.03.2021.

Total sales were Rs. 75,00,000, Rate of Gross profit is 10% on sales.

The expenses charged to profit and loss statement include:

Salesmen’s Commission Rs. 30,000

Discount Allowed Rs. 15,000
Carriage outward Rs. 45,000
Free Sample Rs. 60,000
After sales service charge Rs. 90,000
Directors’ fees Rs. 1,50,000
Audit fees (Statutory audit of company) Rs. 70,000
Tax audit fees to Chartered Accountant Rs. 15,000
Salary to general staff Rs. 16,000
Formation Expenses Rs. 30,000
Rent (Office Building) Rs. 27,000
General Expenses Rs. 48,000
Donation to political party Rs. 51,000
General travelling Expenses Rs. 60,000

The sales per month in the first half year were half of what they were in the later half year.
Rent of office building was paid @ Rs. 2,000 p.m. upto 30th September, 2020 and thereafter
it was increase by Rs. 500 p.m.

Prepare a statement showing pre incorporation & post incorporation profit for the year ended
31.03.2021 and also compute the amount to be transferred to capital reserve account.

Question 3(b) 10
Following is the extract of the Balance Sheet of Anupama Ltd.as at 31st March, 2020

Rs.
Authorized capital:
45,000 12% Preference shares of Rs. 10 each 4,50,000
6,00,000 Equity shares of Rs. 10 each 60,00,000

Issued and Subscribed capital:

ACC 70%
 36,000 12% Preference shares of Rs. 10 each fully paid 3,60,000
4,05,000 Equity shares of Rs. 10 each, Rs. 8 paid up 32,40,000
Reserves and surplus:
General Reserve 5,40,000
Capital Redemption Reserve 1,80,000
Securities premium (collected in cash) 1,12,500
Profit and Loss Account 9,00,000

On 1st April, 2020, the Company has made final call @ Rs. 2 each on 4,05,000 equity shares.
The call money was received by 20th April, 2020. Thereafter, the company decided to
capitalize its reserves by way of bonus at the rate of one share for every four shares held by
utilizing the balance of profit and loss account to the minimum extent.

You are required to prepare necessary journal entries in the books of the company and prepare
the relevant extract of the balance sheet as on 30th April, 2020 after bonus issue.

Question 4(a) 10
Nilkamal Ltd.’s capital structure consists of 45,000 Equity Shares of Rs. 10 each fully paid
up and 3,000 9% Redeemable Preference Shares of Rs. 100 each fully paid up as on
31.03.2021. The other particulars as at 31.03.2021 are as follows:

Amount
(Rs.)
General Reserve 1,80,000
Profit & Loss Account 90,000
Investment Allowance Reserve (not free for distribution as 22,500
dividend)
Cash at bank 2,92,500

Preference Shares are to be redeemed at a premium of 10%. For the purpose of redemption,
the directors are empowered to make fresh issue of Equity Shares at par after utilizing the
undistributed reserve & surplus, subject to the conditions that a sum of Rs. 60,000 shall be
retained in General Reserve and which should not be utilized. Company also sold investment
of 6,750 Equity Shares in Kumar Ltd., costing Rs.67,500 at Rs. 9 per share.

Pass Journal entries to give effect to the above arrangements and also show how the relevant
items will appear in the Balance Sheet as at 31.03.2021 of Nilkamal Ltd. after the redemption
is carried out.

ACC 70%
Question 4(b) 10
The summarized Balance Sheet of Jeera Ltd. as on 31st March, 2018 read as under:

Rs.
Liabilities:
Share Capital: 9,000 equity shares of Rs.10 each, fully paid up 90,000
General Reserve 38,000
Debenture Redemption Reserve 35,000
12% Convertible Debentures : 1,200 Debentures of Rs.50 each 60,000
Unsecured Loans 28,000
Short term borrowings 19,000
2,70,000
Assets:
Fixed Assets (at cost less depreciation) 72,000
Debenture Redemption Reserve Investments 34,000
Cash and Bank Balances 86,000
Other Current Assets 78,000
2,70,000

The debentures are due for redemption on 1st April, 2018. The terms of issue of debentures
provided that they were redeemable at a premium 10% and also conferred option to the
debenture holders to convert 40% of their holding into equity shares at a predetermined
price of Rs. 11 per share and the balance payment in cash.

Assuming that:

(i) Except for debenture holders holding 200 debentures in aggregate, rest of them
exercised the option for maximum conversion,

(ii) The investments realized Rs.56,000 on sale,

(iii) All the transactions were taken place on 1st April, 2018

(iv) Premium on redemption of debentures is to be adjusted against General Reserve.

You are required to

(a) Redraft the Balance Sheet of Jeera Ltd. as on 01.04.2018 after giving effect to the
redemption.
(b) Show your calculations in respect of the number of equity shares to be allotted and
the cash payment necessary.

Question 5(a) 10
On 1st April, 2019 Mr. H had 30,000 equity shares of ABC Ltd. at book value of Rs. 18 per
share (Nominal value 10 per share). On 10th June, 2019, H purchased another 10,000 equity
shares of the ABC ltd. at Rs. 16 per share through a broker who charged 1.5% brokerage.

The directors of ABC Ltd. announced a bonus and a right issue. The terms of the issues were
ACC 70%
as follows:

(i) Bonus shares were declared at the rate of one equity share for every four shares held on
15th July,
2019.

(ii) Right shares were to be issued to the existing equity shareholders on 31st August,
2019. The company decides to issue one right share for every five equity shares held at 20%
premium and the due date for payment will be 30th September, 2019. Shareholders were
entitled to transfer their rights in full or in part.

(iii) No dividend was payable on these issues.

Mr. H subscribed 60% of the rights entitlements and sold the remaining rights for
consideration of Rs. 5 per share.

Dividends for the year ending 31st March, 2019 was declared by ABC Ltd. at the rate of 20%
and received by Mr. H on 31st October, 2019.

On 15th January, 2020 Mr. H sold half of his shareholdings at Rs. 17.50 per share and
brokerage was charged @1 %.

You are required to prepare Investment account in the books of Mr. H for the year ending 31st
March, 2020, assuming the shares are valued at average cost.

Question 5(b) 10
A Fire occurred in the premises of M/s B & Co. on 30th September, 2019. The firm had taken
an insurance policy for Rs. 1,20,000 which was subject to an average clause. Following
particulars were ascertained from the available records for the period from 1st April, 2018 to
30th September, 2019:

Amount
(Rs.)
Stock at cost on 1-04-2018 2,11,000
Stock at cost on 31-03-2019 2,52,000
Purchases during 2018-19 6,55,000
Wages during 2018-19 82,000
Sales during 2018-19 8,60,000
Purchases from 01-04-2019 to 30-09-2019 (including purchase of
machinery costing Rs. 58,000) 4,48,000
Wages from 01-04-2019 to 30-09-2019 (including wages for installation 85,000
of machinery costing Rs. 7,000)
Sales from 01-04-2019 to 30-09-2019 6,02,000
Sale value of goods drawn by partners (1-4-19 to 30-9-19) 52,000
Cost of Goods sent to consignee on 18th September, 2019 lying unsold 44,800
with them
Cost of Goods distributed as free samples(1-4-19 to 30-9-19) 8,500

While valuing the Stock at 31st March, 2019, Rs. 8,000 were written off in respect of a slow
moving item, cost of which was Rs. 12,000. A portion of these goods was sold at a loss of Rs.
4,000 on the original cost of Rs. 9,000. The remainder of the stock is estimated to be worth
ACC 70%
the original cost. The value of Goods salvaged was estimated at Rs. 35,000.

You are required to ascertain the amount of claim to be lodged with the Insurance Company
for the loss of stock.

Question 6(a) 5

Mr. X acquires 200 shares of a company on cum-right basis for ` 60,000. He subsequently
receives an
offer of right to acquire fresh shares in the company in the proportion of 1:1 at ` 105 each. He
does not
subscribe but sells all the rights for ` 15,000. The market value of the shares after their
becoming exrights
has also gone down to ` 50,000. What should be the accounting treatment in this case?

Question 6(b) 5
What is meant by repossession. What is the treatment for repossession in the books of Hire Purchaser?

Question 6(c) 5
How will you classify the investments as per AS 13 ? Explain in Brief.

Question 6(d) 5
Why goods are marked on invoice price by the head office while sending goods to the branch?

ACC 70%
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