ADVANCED ACCOUNTING 25-07-23

NATIONAL MANAGEMENT COLLEGE – PERUNDURAI
CA INTERMEDIATE – 2022-23-P-5 ADVANCED ACCOUNTING
DATE: 25/07/23 TEST NO 2
TIME ALLOWED – 3HOURS MAXIMUM MARKS – 100
Question No 1 compulsory

Answer any 4 from question No 2,3,4,5,6

QUESTION NO.1 15 Marks

The following is an extract from Trial Balance of overseas Bank as at 31 st March, 20X1

₹                               ₹

Bills discounted                                                    12,64,000

Rebate on bills  discounted not due

On March 31 st, 20X0                                                                                22,160

Discount received                                                                                       1,05,708

An analysis of the bills discounted is as follows:

Amount                                                 Due Date 20X1                                    Rate of Discount

(i) 1,40,000                                               June 5                                                          (%)

(ii) 4,36,000                                            June 12                                                          14                                                                (iii) 2,82,000                                          June 25                                                          14                                                                  (iv) 4,06,000                                          July 6                                                              16

Calculate Rebate on Bills Discounted as on 31-3-20X1 and show necessary journal entries.

(b) 5 Marks

The following information is available in the books of X Bank Limited as on 31st March, 20X2:

Bills discounted

Rebate on Bills discounted (as on 1.4.20X1)

Discount received

1,37,05,000

2,21,600

10,56,650

Details of bills discounted are as follows:

Value of bill (₹)Due dateRate of Discount
18,25,000

50,00,000

28,20,000

40,60,000

5.6.20X2

12.6.20X2

25.6.20X2

6.7.20X2

12%

12%

14%

16%

Calculate the rebate on bills discounted as on 31.3.20X2 and give necessary journal entries.

QUESTION NO.2 (a)

A commercial bank has the following capital funds and assets. Segregate the capital funds into Tier I and Tier II capitals. Find out the risk-adjusted asset and risk weighted assets ratio –

Capital Funds:                                                                         (figures in ₹ lakhs)

Equity Share Capital                                                                  4,80,00

Statutory Reserve                                                                       2,80,00

Capital Reserve (of which ₹ 280 lakhs were due                12,10

to revaluation of assets and the balance due to sale

Assets:                                                                                                                                                                                                    Cash Balance with RBI                                                            4,80

Balances with other Bank                                                        12,50

Other on Banks                                                                          28,50

Other Investments                                                                    782,50

Loans and Advances

(i) Guaranteed by government                                               128,20

(ii) Guaranteed by public sector                                            702,50

Undertaking of Government of India

(iii) Others                                                                                 52,02,50

Premises, furniture and fixtures                                           182,00

Other Assets   201,20

Off-Balance Sheet Iterms:

Acceptances, endorsements and letters of credit              37,02,50

(b)        (5 Mark)

Given below are the interests on advances of a commercial bank (₹ in lakhs)

Performing Assets                                  NPA

Interest                           Interest                    Interest                          Interest

                                              Earned                             received                    earned                               received

Term Loans                           120                                    80                              75                                      5

Cash credits and overdrafts  750                                 620                           150                                   12                               Bills Purchased and discounted  150                         150                           100                                   20                                Find out the income to be recognized for the year ended 31st March, 20X1.

(c) (5 Marks)

Find out the income to be recognized in the case of SS Bank for the year ended 31 st March, 20X1:                                      (₹ in lakhs)

                                                                                           Performing Assets                 Non-performing Assets
 Interest

 accrued

Interest

received

Interest

accrued

Interest

received

Term loans

Cash credits and

240

1,500

160

1,240

150

300

10

24

Questinos 3 (a) (15 Marks)

X Ltd. Was ordered to be would up on 31st March, 20X2 on which date the following balances were extracted from its books:

Goodwill

Building

Plant

Fixtures

Stock

Debtors

Cash

Profit and loss account (Dr. balance)

Share Capital: 10,000 equity Shares of ₹ 100 each

5% Debentures (Secured by floating charge on all assets)

Interest payable on these debentures

Bank overdraft (secured by hypothecation of stock)

Creditors

1,00,000

3,50,000

5,50,000

23,000

38,000

25,000

500

1,38,500

10,00,000

1,60,000

4,000

25,000

36,000

The amounts estimated to be realized are: Goodwill ₹ 1,000; Building ₹ 3,00,000; Plant ₹ 5,25,000; Fixtures ₹ 10,000; Stock ₹ 31,000; Debtors ₹ 20,000.

Creditors included ₹ 6,000 on account of wages of 15 men at ₹ 100  per month for 4 months immediately before the date of winding up: ₹ 9,000 being the salaries of 5 employees at ₹ 300 per month for the previous 6 months; Rent for godown    for the last six amounting to ₹ 3,000; Income-tax deducted out of salaries of employees ₹ 1,000 and Directors Fees ₹ 500

There years ago, the debit balance in the Profit and Loss Account was ₹ 77,925 and since that date the accounts of the company have shown the following figures:

Year

31-3-20X1

Year

31-3-20X1

Year

31-3-20X2

Gross Profit

 

Wages and Salaries

Debentures interest

Bad Debts

Depreciation

Directors’ Fees

Miscellaneous Expenses

Total

65,000

 

40,500

5,750

8,000

6,700

1,000

10,500

80,990

45,000

 

36,000

6,380

8,000

 

1,000

7,265

66,245

40,000

 

34,400

5,260

8,000

 

1,000

7,980

63,340

In addition it is estimated that the company would have to pay ₹ 5,000 as compensation to an employee for injuries suffered by him which was contingent liability not accepted by the company.

Prepare the Statement of Affairs and the Deficiency account

(b) (5 Mark)

A  liquidator is entitled to receive remuneration at 2% on the assets realized, 3% on the amount distributed to Preferential creditors and 3% on the payment made to unsecured creditors. The assets were realized for ₹ 50,00,000 against which payment was made as follows:

Liquidation ₹ 50,000

Secured Creditors ₹ 20,00,000

Preferential Creditors ₹ 1,50,000

The amount due to Unsecured creditors was ₹ 30,00,000

You are asked to calculate the total Remuneration payable to Liquidator. Calculation shall be made to the nearest multiple of a rupee.

Question no. 4

Bright Finance Ltd. Is a non-banking financial company. It provides you with the following information regarding its outstanding amount, ₹ 200 lakhs of which installments are overdue on 200 accounts for last one month (amount overdue ₹ 40 lakhs), on 24 accounts for two months (amount overdue ₹ 24 lakhs), on 10 accounts for more than 30 months (amount overdue ₹ 20 lakhs) and on accounts for more than two years (amount over due ₹ 20 lakhs-already identified as sub-standard assets) and one account of ₹ 10 lakhs which has been identified as non-recoverable by the management. Out of 10 accounts overdue for more than 30 months, 6 accounts are already identified as sub-standard (amount ₹ 6 lakhs) for more than twelve months.

Classify the assets of the company in line with Non-Banking Financial Company –Systemically Important Non-Deposit taking company and Deposit taking Company (Reserve Bank) Directions, 2016.

(b) (5 Mark)

White closing its books of account on 31 st March, a Non-Banking Finance Company has its advances classified as follows:

₹ in lakhs
Standard assets

Sub- standard assets

Secured portions of doubtful debts:

–         upto one year

–         one year to three years

–         more than three years

16,800

1,340

 

320

90

30

Unsecured portions of doubtful debts

Loss asset

97

48

Calculate the amount of provisions, which must be made against the Advances as per the Non-Banking Financial Company – Non Systemically Important Non – Deposit taking Company (Reserve Bank) Directions, 2016.

(c) (5 Mark)

Babu Bhai Financiers Ltd. Is an NBFC Providing Hire Purchase Solutions for acquiring consumer durables. The following information is extracted from its books for the year ended 31st March, 20X1:

 

Assets Funded

Interest Overdue but recognized

in Profit & Loss

Net Book Value

of  Assets

Outstanding

Period OverdueInterest Amount
(₹ In crore)(₹ In crore)
LCD Televisions

Washing Machines

Refrigerators

Air Conditioners

Mobile Phones

Up to 12 months

For 24 Months

For 30 Months

For 45 Months

For 60 Months

500.00

100.00

50.00

25.00

10.00

20,000

2,000

1,250

600

100

You are required to calculate the amount of provision to be made.

 

Question No.5 (5 Mark)

From the following information, find out the amount of provisions to be shown in the profit and Loss Account of AG bank.

₹ in lakhs

Assets

Standard                                                                   5000

Sub-standard                                                          4000

Doubtful         : for one year                                 800

: for three years                                                     600

: for more than three years                                200

Loss Assets                                                           1000

(b) (5 Marks)

From the following information of AY Limited, compute the provisions to be made in the profit and Loss account:

 

 

₹ in lakhs
Assets

Standard

Substandard

Doubtful

For one year (secured)

For two years and three years (secured)

For more than three years (secured by mortgage of plant

 

Loss Assets

 

20,000

16,000

 

6,000

4,000

2000

 

1,500

 

(c) (5 Mark)

Templeton Finance Ltd. Is a banking finance company. It provides the following information:

 

Leased out assets

Investment:

In shares of subsidiaries and group companies

In debentures of subsidiaries and group Companies

Cash and bank balances

Deferred expenditure

Paid-up equity capital

Free reserves

Loans

Deposits

₹ in crores

800

 

100

100

200

200

100

500

400

400

 

You are required to compute ‘Net owned Fund’ of Templetion Finance Ltd. As per Non-Banking Financial Company – Systemically Important Non – Deposit taking Company and Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016.

Question No.6 (a) 5 Mark

The following is an extract Trial Balance of overseas Bank as at 31 st March, 20X1

₹                                                     ₹

Bills discounted                                          12,64,000

Rebate on bills discounted not due

On March 31 st , 20X0                                                                                          22,160

Discount received                                                                                                  1,05,708

 

An analysis of the bills discounted is as follows:

Amount                                          Due Date 20X                                   Rate of Discount

(i) 1,40,000                                         June 5                                                              (%)

(ii) 4,36,000                                     June 12                                                              14

(iii) 2,82,000                                    June 25                                                              14                                                                    (iv) 4,06,000                                   July 6                                                                  16

Calculate Rebate on Bills Discounted as on 31-3-20X1 and show necessary journal entries.

(b) 5 Mark

The following information is available in the books of X Bank Limited as on 31st March,

Bill discounted

Rebate on Bills discounted (as on 1.4.20X1)

Discount received

1,37,05,000

2,21,600

10,56,650

Details of bills discounted are as follows:

Value of bill (₹)Due dataRate of Discount
18,25,000

50,00,000

28,20,000

40,60,000

5.6.20X2

12.6.20X2

25.6.20X2

6.7.20X2

12%

12%

14%

16%

Calculate the rebate on bills discounted as on 31.3.20X2 and give necessary journal entries.

( c) 5 Mark

From the following details prepare “ Acceptances, Endorsements and other Obligation A/c” as would appear in the General Ledger.

On 1.4.20X1 Acceptances not yet satisfied stood at ₹ 22,30,000. Out of which ₹ 20 lacs were subsequently paid off by clients and bank had to honour the rest. A scrutiny of the Acceptance Register (for transactions during the year) revealed the following:

Client Acceptances/Guarantees Remarks:

A

B

C

D

E

F

Total

10,00,000

12,00,000

5,00,000

8,00,000

5,00,000

2,70,000

42,70,000

Bank honoured on 10.6.2oX1

Party paid off on 30.9.20X1

Party failed to pay and bank had to honour on 30.11.20X1

Not satisfied upto 31.3.20X2

-do-

-do-

 

 

(d) 5 Mark

Ina liquidation which commenced on April 2, 20X2 certain creditors could not receive payments out of the realization of assets and out of the contributions from “A” list Contributories. The following are the details of certain transfers, which took place in 20X1 and 20X2.

ShareholdersNumber of shares

transferred at the date

of ceasing to be member

Date of ceasing

to be member

Creditors remaining unpaid and

outstanding

X

A

B

C

D

1,500

1,000

1,500

300

200

1 st March 20X1

1 st May 20X1

1 st July 20X1

1 st Nov. 20X1

1 st Feb. 20X2

4,000

6,000

7,500

8,000

9,500

All the share were ₹ 10 each, ₹ 6 paid up ignoring expenses of and remuneration to liquidators, etc., show the amount to be realized from the various persons listed above.

 

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