CHRIST (Deemed to be University), Bangalore – 560 029

Department of Professional Studies

END SEMESTER EXAMINATION – December 2022
UG I Semester
Programme Name: I B.Com.P Max. Marks: 100
Course Name: Financial Accounting-I Time: 3 Hrs
Course Code: COP131
General Instructions
 All rough work should be done in the answer script. Do not write or scribble in the question
paper except your register number.
 Verify the Course code / Course title & number of pages of questions in the question paper.
 Make sure your mobile phone is switched off and placed at the designated place in the hall.
 Malpractices will be viewed very seriously.
 Answers should be written on both sides of the paper in the answer booklet. No sheets should
be detached from the answer booklet.
 Answers without the question numbers clearly indicated will not be valued. No page should
be left blank in the middle of the answer booklet.

Course Outcomes (COs): The students will be able to

CO1: Discuss and apply fundamental accounting concepts, principles and conventions
CO2: Record transactions and prepare annual financial statements for a sole proprietor
business, discuss and apply Ind AS on Inventories; Revenue; PPE and Investment Property
CO3: Prepare basic partnership accounts on operation and dissolution
CO4: Pass relevant journal entries and prepare the financial statements of partnerships after
amalgamation
CO5: Record transactions on sale of a partnership firm
SECTION A

Answer all the questions: 4 X 5 marks = 20 Marks

Q. Questions C RB
N O T
o

1 a) Pass journal entries for the following transactions: 2 L3

Jan 1 Sold goods to Joe worth Rs. 1,00,000
Jan 3 Purchased goods from Joe worth Rs. 50,000
Jan 5 Received from him Rs. 39,000 on account and allowed him Rs.
1,000 discount
Jan 10 Returned goods to him worth Rs. 5,000
Jan 20 Sold goods to him worth Rs. 40,000
Jan 25 Joe's mother returned goods worth Rs. 10,000 on Joe's behalf
(OR)
b) Classify the following by nature and state the balance it has:
a. Bank Account
b. Partner's Capital Account
c. Discount allowed Account
d. Purchase Returns Account

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 e. Building Account

a) Brother Limited imported 6,000 bags of Rice at a price of Rs. 300

per bag. The shipping charges amounted to Rs. 42,000 while the
clearing and forwarding charges amounted to Rs. 36,000. It has
agreed to pay its salesmen a commission of 2% on the selling price of
Rs. 325 and the selling and distribution expenses are estimated at Rs.
6 per bag. Determine the value of closing stock of 2,000 bags as per
2 Ind AS-2. 2 L2
(OR)
b) Carrot Ltd bought a machine for Rs. 5,50,000 with an estimated
useful life of 10 years. After using the machine for 2 years, the useful
life of the machine was revised to 5 years. Compute depreciation as
per the provisions of Ind AS 16 for Year 1 to Year 4 assuming the
residual value of the machine is Rs. 50,000.

a) List the circumstances under which the court may order for
dissolution of a partnership firm.
(OR)

b) L,M and N are the partners of firm M/s LMN. They share profits in
the ratio of 1:2:1. Due to a disagreement, they decide to dissolve their
partnership firm wef 31 Dec 2022. Furniture is realised at ₹1,40,000,
current assets at 20% less than book value. Realisation expenses are
paid and borne by the firm to the tune of ₹2,000. Below is the balance
3 sheet of M/s LMN as at 31 Dec 2022 : 3 L3

Liabilities Amount (₹) Assets Amount (₹)

Capital L - 80,000 Bank 45,000
M - 60,000 Current Assets 60,000
N - 40,000 180,000 Furniture 110,000
Creditors 60,000 Computers 25,000

240,000 240,000
Prepare the Realisation A/C.
4 4 L5
a) Pass journal entries for the following:
a. Increase in the value of assets on revaluation by Rs. 1,200
b. Asset taken over by the new firm Rs. 7,400
Also state any 3 objectives of amalgamation.
(OR)
b) In the context of amalgamation of a partnership firm (A&B -3:2,
C&D-1:1, ABC&D-1:1:1:2), frame journal entries for the following:
a. Goodwill created in the books of the A&B (old firm) Rs. 3,600 and

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 C&D (old firm) Rs. 2,400
b. Transfer of capital and goodwill to the new firm
c. Recording of assets, liabilities and capital taken over in the books
of the new firm
d. Write off of goodwill in the new firm.

SECTION B

Answer all the questions: 4 X 15 marks = 60 Marks

Q. Questions CO RBT
No

1 1 L3
a) The Trial Balance of Girish as on 31.03.2022 showed a difference of
Rs. 5,800 (excess debit) which was temporarily posted to the Suspense
Account. Later, the following errors were noticed:
Rs. 1,000 being Purchase Returns was posted to the debit of Purchases
Account
Rs. 5,740 paid for repairs of Machine was debited to Machinery
Account as Rs. 1,740
A sale of Rs. 4,600 to Sunil was entered in the Sales Book as Rs. 6,400
Rs. 5,400 received from Murthy was posted to the debit of his account
Discount of Rs. 2,000 received, entered in the Cash Book was not
posted to the Ledger
The purchase of Furniture of Rs. 7,500 was entered in the Purchases
Account
While carrying forward the total of one page in Kumar’s Account, the
amount of Rs. 2,500 was written on the credit side instead of the debit
side.
You are required to pass suitable rectification journal entries and
prepare Suspense Account.
(OR)
b) On 31.3.2023, the bank column of the Cash Book of Ms. Sarah
showed a credit balance of Rs. 21,810. On comparison of the Cash
Book with the bank statement, it was found that:

Cheques issued amounting to Rs. 11,520 in March 2023 had been

entered into the Cash Book as Rs. 11,250. The cheques were presented
at the Bank in April 2023
A cheque for Rs. 750 deposited into the Bank has been erroneously
debited by the Bank
Interest for Rs. 1180 charged by the Bank was not recorded in the Cash
Book
A Debtor has directly paid Rs. 3,270 into the Bank in respect of which
no entry has been made in the Cash Book.

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 Rs. 1,580 was entered in the Cash Book as paid into the Bank on
31.03.2023, but not credited in the Bank until 01.04.2023
The payment side of the Cash Book has been under cast by Rs. 1000
You are required to show the necessary corrections in the Cash Book
and prepare a Bank Reconciliation Statement as on 31.03.2023.

2 a) 3 L2
Lean, Stout and Thin were partners sharing profits and losses in the
ratio of 3:2:1. On 31st December, 2022 their Balance Sheet was as
below:
Amoun Amoun
Liabilities Assets
t t
Sundry Creditors 30,000 Cash at Bank 9,500
Bills Payable 5,000 Stock 15,500
Lean’s Loan Account 6,000 Sundry Debtors 32,000
Reserve Fund 12,000 Furniture 5,000
Profit and Loss
6,000 Plant and Machinery 21,000
Account
Capital Account: Drawings
Lean 20,000 Lean 4,000
Stout 15,000 Stout 1,000 5,000
Thin’s Capital
6,000
Account
94,000 94,000
The assets realised as follows:
Stock Rs. 12,200 ; Sundry Debtors Rs. 30,100 ; Furniture Rs 4,200.
Plant and Machinery is taken over by Lean at Rs. 18,000. A contingent
liability for Bill Receivable discounted materialised to the extent of Rs.
600. Realisation expenses amounted to Rs. 600. Prepare necessary
accounts to close the books of the firm, if the capitals are fluctuating.
(OR)
b) A and B are partners of a firm sharing profits and losses. Sales for
year were ₹7,20,000 and cost of goods sold were ₹5,10,000. The capital
balances at the end of the year were ₹5,00,000 and ₹2,00,000
respectively. The net profit for the year was ₹96,000. The deed
provides for an interest on capital and drawings at 5% p.a. The deed
allows a salary of ₹500 per month to A. B also claims a salary of ₹250
per month. The drawings of A and B for the year were ₹2,000 each. B
gives a loan of ₹10,000 to the firm. B is also entitled to a 5%
commission on gross profit after charging such commission. They
decide to transfer 20% of free and distributable profits to the general
reserve.
[Gross profit = Sales (-) Cost of goods sold].
Prepare the Profit and Loss Appropriation Account.

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 Write a brief note on provisions that apply to a partnership in the
absence of a partnership deed with respect to the above question.

3 a) The Balance Sheets of M/s. AB & Co. and M/s. CD & Co. as on 4 L3
31st March, 2023 were as follows:
AB & CD & AB & CD &
Liabilities Assets
Co. Co. Co. Co.
(Rs) (Rs) (Rs) (Rs)
Capital Land 10,000 12,000
A 10,000 Machinery 7,000 8,000
B 10,000 Furniture 3,000 3,500
Sundry
C 10,000 6,000 8,500
Debtors
D 10,000 Stock 8,000 10,000
Creditors 15,000 10,000 Cash at Bank 3,000 1,000
Loan 10,000
Outstanding
2,000 3,000
Expenses
37,000 43,000 37,000 43,000
The two firms decided to amalgamate and form into ABCD & Co. with
effect from April 1, 2023. Partners would share equally between
themselves as they were doing prior to amalgamation and they agreed to
the following revaluation of assets and liabilities.
AB & Co. CD & Co.
Land 10,000 10,000
Machinery 7,000 8,000
Furniture 2,500 2,500
Sundry Debtors 5,500 7,000
Stock 8,000 8,000
Outstanding Expenses 2,000 3,500
In addition to the above it was decided as under:

I. That the new firm would not take over the loan of CD & Co.
which is taken over by the two partners equally.
II. That the Goodwill of AB & Co. and CD & Co. was valued at Rs.
10,000 and Rs. 5,000 respectively which is to be written off in the
books of the new firm.
III. That the reconstructed capitals of partners should be Rs. 11,000
each with the partners introducing cash, if necessary.

You are required to:

a. Pass necessary journal entries in the books of AB & Co. and CD

& Co.

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 b. Pass necessary journal entries in the books of the ABCD & Co.

(OR)
b) P & Q are partners of PQ & Co. sharing profits and losses equally
while R & S are partners of RS & Co. having profit sharing ratio of 3:2.
They decided to amalgamate and form a new firm by name PQRS & Co.
where they would share profits and losses in the ratio 3:3:2:2. Goodwill
of PQ & Co. was valued at Rs. 1,00,000 and goodwill of RS & Co. was
valued at Rs. 50,000. Pass necessary journal entries in the book of the old
firms and the new firm for creation and write off of Goodwill. Also state
the treatment of undistributed profit on amalgamation of a partnership
firm and frame the journal entry.

4 a) Ram and Sham were in partnership sharing profits and losses in the 5 L5
ratio 3 : 1. The following is the Balance Sheet of the partnership as at
31st March, 2023.
Liabilities Amount Assets Amount
Capital Account: Fixed Assets 210,000
Ram 240,000 Stock 112,000
Sham 80,000 320,000 Debtors 196,000
Current Account Cash at Bank 37,200
Ram 42,000
Sham 20,000 62,000
Loan -Sham 30,000
Creditors 143,200
555,200 555,200
Sita Ltd. agreed to take over stock and Fixed Assets, excluding the
value of motor car Rs. 41,000, for a consideration of Rs. 480,000
which is to be satisfied by payment of cash. Rs. 160,000, allotment of
160 preference shares of Rs 1000 each valued at Rs. 750 per share, and
the balance by allotment of 1,600 Equity Shares of the face value of
Rs. 100 each.
The debtors realised Rs. 192,000 and the creditors were settled for Rs.
140,000.
The following were agreed between the partners:

a. The Equity Share should be allotted in the ratio of the partners’

capital accounts as per Balance Sheet.
b. Ram to take over the motor car at an agreed value of Rs.
42,000.
c. The Preference Shares to be allotted to Sham to the value of his
loan and the remainder to be allotted equally between the
partners.
d. Balance remaining to be settled in cash.

Prepare the necessary accounts to close the books of the firm.

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 (OR)

b) Anu and Sonu were in partnership sharing profits and losses in the
ratio of 2 : 1. Their summarised Balance Sheet as on 31st March, 2023
was as under:

Liabilities Amount Assets Amount

Capital Account: Fixed Assets 1,40,000
Anu 1,00,000 Stock 70,000
Sonu 80,000 1,80,000 Debtors 1,00,000
Anu’s Current Account 40,000 Bills Receivable 25,000
Loan from Sonu 63,000 Bank 20,000
Creditors for Goods 1,10,000 P&L Account 15,000
Sonu’s Current Account 23,000
3,93,000 3,93,000
They decided to dissolve the business and accepted the offer of Tony
and Co. Ltd. to acquire stock and fixed assets excluding two motor cars
at a total price of Rs. 3,35,000. The debtors realised Rs. 97,000 and
Bills Receivable Rs. 24,000. Creditors for goods allowed a discount of
5%.
The purchased consideration was to be discharged by a cash payment
of Rs. 83,000, the allotment by the company to the partners of 8,000
preference shares of Rs. 10 each (valued at Rs. 9 each), and the balance
by the allotment of 9,000 ordinary shares of Rs. 10 each.
The partners agreed that the following should be the basis of
distribution on dissolution of the firm;

a. Anu to take over one Motor car at a value of Rs. 25,000 and
Sonu the other car at Rs. 15,000.
b. Sonu to accept preference shares for his loan to the firm, the
remainder to be taken over by Anu.
c. The ordinary shares to be taken over by Anu and Sonu in
proportion of their fixed capitals.
d. The balance to be settled in cash.

Prepare the necessary accounts to close the books of the firm.

SECTION C
Compulsory question 1 X 20 marks = 20 Marks

Q. No Question CO RBT
1 2 L3
Following is the Trial Balance of Manoj as on 31.03.2023:

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 Particulars Debit (Rs.) Credit (Rs.)
Manoj’s drawing and capital account 18,000 80,000
Purchases and returns 2,20,000 8,000
Sales and returns 8,000 3,20,000
Opening Stock 60,000
Freight 8,500
Rent and taxes 11,500
Wages 6,400
Sundry debtors and creditors 34,000 15,000
Loan from bank 10,000
Interest on bank loan 800
Printing and stationery 400
Advertisement 600
Investments 8,000
Income from investments 400
Discounts 800 1,700
Furniture and fixtures 4,000
Land and building 40,000
Cash and bank 6,000
Trade expenses 500
Insurance 600
Travelling expenses 1,400
Cash in hand 1,000
Deposit with Madhu @ 8% 5,000
Interest on above deposit 400
You are required to prepare the Trading and Profit and Loss Account
for the year ended 31.03.2023 and Balance Sheet as on that date after
taking into consideration the following information:
1. Stock on 31-03-2023 was Rs 80,000
2. Create provision for bad debts at 5%
3. Creditors worth Rs. 5,000 were settled for Rs. 2,000 in cash
4. Purchase includes purchase of furniture worth Rs. 20,000
5. Depreciate furniture and fittings by 10%.

Revised Bloom’s Taxonomy (RBT) Levels :

L1 – Remembering L2 – Understanding L3 – Applying

L4 – Analyzing L5 – Evaluating L6 - Creating

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