CA Foundation MTP Series 1 Sept ACCOUNTS PAPER PDF

Mock Test Paper - Series I: July, 2024 Date of Paper: 29th July, 2024 Time of Paper: 10.30 A.M. to 1.30 P.M. FOUNDATION COURSE PAPER – 1: A...

Mock Test Paper - Series I: July, 2024 Date of Paper: 29th July, 2024 Time of Paper: 10.30 A.M. to 1.30 P.M. FOUNDATION COURSE PAPER – 1: ACCOUNTING Question No. 1 is compulsory. Answer any four questions from the remaining five questions. Wherever necessary, suitable assumptions should be made and disclosed by way of note forming part of the answer. Working Notes should form part of the answer. (Time allowed: 3 Hours) (100 Marks) 1. (a) State with reasons, whether the following statements are true or false: 1 The balance in petty cash book represents an asset. 2. Finished goods are normally valued at cost or market price whichever is higher. 3 Subscriptions received for the current year shall be shown in the balance sheet as a current asset. 4 When shares are forfeited, the share capital account is debited with called up capital of shares forfeited and the share forfeiture account is credited with Calls in arrear of shares forfeited. 5 Discount at the time of retirement of a bill is a gain for the drawee. 6. Bills receivable and bills payable books are type of subsidiary books. (6 statements x 2 Marks = 12 Marks) (b) What services can a Chartered Accountant provide to the society? (4 Marks) (c) One of your clients Mr. X asked you to finalize his account for the year ended 31st March,2024. As a basis for audit, Mr. X furnished you with the following statement: Dr. Cr. X's Capital 4,668 X's Drawings 1,692 Leasehold Premises 2,250 Sales 8,250 Due from customers 1,590 Purchases 3,777 Purchase Return 792 Loan from Bank 768 1  Trade Expense 2,100 Trade Payable 1,584 Bills Payable 300 Salaries and Wages 1,800 Cash at Bank 678 Opening Inventory 792 Rent and Rates 1,389 Sales Return 294 16,362 16,362 The closing inventory was `1,722. Mr. X claims that he has recorded every transaction correctly as the trial balance is tallied. Check the accuracy of the above trial balance and give reasons for the errors, if any. (4 Marks) (12 + 4 + 4 = 20 Marks) 2. (a) Mr. Manas was unable to agree the Trial Balance last year and wrote off the difference to the Profit and Loss Account of that year. Next year, he appointed a Chartered Accountant who examined the old books and found the following mistakes: (i) Purchase of a scooter was debited to conveyance account ` 30,000. Mr. Manas charges 10% depreciation on scooter. (ii) Purchase account was over cast by ` 1,00,000. (iii) A credit purchase of goods from Mr. Sam for ` 20,000 was entered as sale. (iv) Receipt of cash from Mr. Anand was posted to the account of Mr. Bhaskar ` 10,000. (v) Receipt of cash from Mr. Paras was posted to the debit of his account, ` 5,000. (vi) ` 5,000 due by Mr. Ramesh was omitted to be taken to the Trial Balance. (vii) Sale of goods to Mr. Ram for ` 20,000 was omitted to be recorded. (viii) Amount of ` 23,950 of purchase was wrongly posted as ` 25,930. Suggest the necessary rectification entries. (10 Marks) (b) M/s Dheeraj, Profit and loss account showed a net profit of ` 8,00,000, after considering the closing stock of ` 7,50,000 on 31st March, 2024. Subsequently the following information was obtained from scrutiny of the books: (i) Purchases for the year included ` 30,000 paid for new electric fittings for the shop. (ii) M/s Dheeraj gave away goods valued at ` 80,000 as free samples for which no entry was made in the books of accounts. 2  (iii) Invoices for goods amounting to ` 5,00,000 have been entered on 27th March, 2024, but the goods were not included in stock. (iv) In March, 2024 goods of ` 4,00,000 sold and delivered were taken in the sales for April, 2024. (v) Goods costing ` 1,50,000 were sent on sale or return in March, 2024 at a margin of profit of 33-1/3% on cost. Though approval was given in April, 2024 these were taken as sales for March, 2024. You are required to determine the adjusted net profit for the year ended on 31.3.2024 and calculate the value of stock on 31st March, 2024. (10 Marks) (10 +10 = 20 Marks) 3. (a) The trial balance of Saurav as at 31st March, 2024 is as follows: Particulars Dr. Cr. ` ` Saurav’s capital account - 1,91,725 Stock 1st April, 2023 1,17,000 - Sales - 9,74,000 Returns inward 21,500 - Purchases 8,04,250 - Returns outward - 14,500 Carriage inwards 49,000 - Rent & taxes 11,750 - Salaries & wages 23,250 - Sundry debtors 60,000 - Sundry creditors - 37,000 Bank loan @ 14% p.a. - 50,000 Bank interest 2,750 - Printing and stationary expenses 36,000 - Bank balance 20,000 - Discount earned - 11,100 Furniture & fittings 12,500 - Discount allowed 4,500 - General expenses 28,625 - Insurance 3,250 - Postage & telegram expenses 5,825 - Cash balance 950 - Travelling expenses 2,175 - Drawings 75,000 - 12,78,325 12,78,325 3  The following adjustments are to be made: (1) Provision for bad and doubtful debts be created at 5% and for discount @ 2% on sundry debtors. (2) Personal purchases of Saurav amounting to ` 1,500 had been recorded in the purchases day book. (3) Depreciation on furniture & fittings @ 10% shall be written off. (4) Included amongst the debtors is ` 7,500 due from Sunder and included among the creditors ` 2,500 due to him. (5) A quarter of the amount of printing and stationary expenses is to be carried forward to the next year. (6) Credit purchase invoice amounting to ` 1,000 had been omitted from the books. (7) Stock on 31.03.2024 was ` 1,96,500. (8) Interest on bank loan shall be provided for the whole year. You are required to prepare Trading & Profit and Loss Account for the year ended 31.03.2024. (12 Marks) (b) The following is the Balance Sheet of M/s. Vivek Bros as at 31st March, 2024, they share profit and losses equally: Balance Sheet as at 31st March, 2024 Liabilities ` Assets ` Capital Amit 24,600 Machinery 30,000 Puneet 24,600 Furniture 16,800 Sumit 27,000 Fixture 12,600 General 9,000 Cash 9,000 Reserve Trade 14,100 Inventories 5,700 payables Trade receivables 27,000 Less: Provision for 1,800 25,200 Doubtful debts 99,300 99,300 Sumit died on 1st April, 2024 and the following agreement was to be put into effect. (a) Assets were to be revalued: Machinery to ` 35,100; Furniture to ` 13,800; Inventory to ` 4,500. (b) Goodwill was valued at ` 18,000 and was to be credited with his share, without using a Goodwill Account. 4  (c) ` 6,000 is to be paid to the executors of the dead partner on 5th April, 2023. (d) After death of Sumit, Amit and Puneet share profit equally. You are required to prepare: (i) Journal Entry for Goodwill adjustment. (ii) Revaluation Account and Capital Accounts of the partners. (8 Marks) (12 + 8 = 20 Marks) 4. (a) A and B are partners in a firm, sharing Profits and Losses in the ratio of 3 : 2. The Balance Sheet of A and B as on 31.3.2024 was as follow: Liabilities Amount ` Assets Amount ` Sundry Creditors 25,800 Building 52,000 Bill Payable 8,200 Furniture 11,600 Bank Overdraft 18,000 Stock-in-Trade 42,800 Capital Accounts: Debtors 70,000 A 88,000 Less: Provision 400 69,600 B 72,000 1,60,000 Investment 5,000 _______ Cash 31,000 2,12,000 2,12,000 ‘C’ was admitted to the firm on the above date on the following terms: (i) He is admitted for 1/6th share in future profits and to introduce a Capital of ` 50,000. (ii) The new profit sharing ratio of A, B and C will be 3 : 2 : 1 respectively. (iii) ‘C’ is unable to bring in cash for his share of goodwill, they decide to calculate goodwill on the basis of C’s share in the profits and the capital contribution made by him to the firm. (iv) Furniture is to be written down by ` 1,740 and Stock to be depreciated by 5%. A provision is required for Debtors @ 5% for Bad Debts. A provision would also be made for outstanding wages for ` 3,120. The value of Buildings having appreciated be brought upto ` 58,400. The value of investment is increased by ` 900. (v) It is found that the creditors included a sum of ` 2,800, which is not to be paid off. Prepare the following: (i) Revaluation Account. (ii) Partners’ Capital Accounts. (iii) Balance Sheet of New Partnership firm after admission of ‘C’. (12 Marks) 5  (b) The following information of M/s. Football Club are related for the year ended 31st March, 2024: (1) Balances As on As on 01-04-2023 31-3-2024 (`) (`) Stock of Sports Material 4,50,000 6,75,000 Amount due for Sports Material 4,05,000 5,85,000 Subscription due 67,500 99,000 Subscription received in advance 54,000 31,500 (2) Subscription received during the year ` 22,50,000 (3) Payments for Sports Material during the year ` 13,50,000 You are required to: (A) Ascertain the amount of Subscription and Sports Material that will appear in Income & Expenditure Account for the year ended 31.03.2024 and (B) Also show how these items would appear in the Balance Sheet as on 31.03.2024. (8 Marks) (12+8=20 Marks) 5. (a) On 31st March 2024, the Bank Pass Book of Swati showed a balance of ` 1,50,000 to her credit while balance as per cash book was ` 1,12,050. On scrutiny of the two books, she ascertained the following causes of difference: (i) She has issued cheques amounting to ` 80,000 out of which only ` 32,000 were presented for payment. (ii) She received a cheque of ` 5,000 which she recorded in her cash book but forgot to deposit in the bank. (iii) A cheque of ` 22,000 deposited by her has not been cleared yet. (iv) Mr. Gupta deposited an amount of ` 15,700 in her bank which has not been recorded by her in Cash Book yet. (v) Bank has credited an interest of ` 1,500 while charging ` 250 as bank charges. Prepare a bank reconciliation statement. (5 Marks) (b) The Income Tax Officer, on assessing the income of Zavier for the financial years 2021-2022 and 2022-2023 feels that Zavier has not disclosed the full income. He gives you the following particulars of assets and liabilities of Zavier’s on 1st April, 2021 and 1st April, 2023. ` 1-4-2021 Assets : Cash in hand 25,500 Inventory 56,000 6  Sundry debtors 41,500 Land and Building 1,90,000 Wife’s Jewellery 75,000 Liabilities : Owing to Zavier’s Brother 40,000 Sundry creditors 35,000 1-4-2023 Assets : Cash in hand 16,000 Inventory 91,500 Sundry debtors 52,500 Land and Building 1,90,000 Motor Car 1,25,000 Wife’s Jewellery 1,25,000 Loan to Zavier’s Brother 20,000 Liabilities : Sundry creditors 55,000 During the two years the domestic expenditure was ` 4,000 p.m. The declared incomes of the financial years were ` 1,05,000 for 2021-2022 and ` 1,33,000 for 2022-2023 respectively. State whether the Income-tax Officer’s contention is correct. Explain by giving your workings. (5 Marks) (c) Safari Ltd. (unlisted company other than AIFI, Banking company, NBFC and HFC) provides the following information as at 31st March, 2024: Particulars ` Shareholder's Funds (a) Share Capital Authorized share capital: 45,000 equity shares of ` 10 each fully paid 4,50,000 Issued and subscribed share capital: 30,000 equity shares of ` 10 each fully paid 3,00,000 (b) Reserves and Surplus Profit & Loss Account 1,62,000 Debenture Redemption Reserve 18,000 Non-current liabilities (a) Long term borrowings 12% Debentures 1,80,000 Current Liabilities (a) Trade payables 1,72,500 Non-current assets (a) Property, Plant and Equipment (Freehold 1,72,500 property) (b) Non-current Investment: DRR Investment 27,000 7  Current assets (a) Inventories 2,02,500 (b) Trade receivables 1,12,500 (c) Cash and bank balances: Cash at bank 2,73,000 Cash in hand 45,000 At the Annual General Meeting on 1.4.2024, it was resolved: (a) To give existing shareholders the option to purchase one ` 10 share at ` 15 for every four shares (held prior to the bonus distribution). This option was taken up by all the shareholders. (b) To issue one bonus share for every five shares held. (c) To repay the debentures at a premium of 3%. Give the necessary journal entries for these transactions. (10 Marks) (5 + 5 + 10 = 20 Marks) 6. (a) X Limited invited applications for issuing 75,000 equity shares of ` 10 each at a premium of ` 5 per share. The total amount was payable as follows: - ` 9 per share (including premium) on application and allotment - Balance on the First and Final Call Applications for 3,00,000 equity shares were received. Applications for 2,00,000 equity shares were rejected and money refunded. Shares were allotted on pro-rata basis to the remaining applicants. The first and final call was made. The amount was duly received except on 1,500 shares applied by Mr. Raj. His shares were forfeited. The forfeited shares were re-issued at a discount of ` 4/- per share. Pass necessary journal entries for the above transactions in the books of X Limited. (15 Marks) (c) State the causes of difference between the balance shown by the pass book and the cash book. OR Which subsidiary books are normally used in a business? (5 Marks) (15 + 5 = 20 Marks) 8