March 2005

Financial Accounting

Time: 3Hours                                                Marks: 100

N.B. :
(1) Question No. one is compulsory.
(2) Solve any five questions out of Q. Nos. 2 to 9.
(3) All working Notes should from part of answer.
(4) Figures to the right indicate full marks assigned to question.
(5) Specify assumptions, if any, while solving the question.


Q. 3. Enron Ltd. gave notice of its intention to redeem its outstanding Rs. 6,00,000 - 8% debentures at Rs. 103 and offered the holders the following options :- (16)

(a) 10% Preference Shares of Rs. 20 each at Rs. 25

(b) 9% Debentures at Rs. 96

(c) To have holdings redeemed for cash.

(i) The holders of Rs. 1,80,000 debentures accepted proposal (a)
(ii) The holders of Rs. 2,40,000 debentures accepted proposal (b)
(iii) The remaining debenture holders accepted proposal (c)

Pass necessary journal entries in the books of Enron Ltd.

OR













Q. 6. On 1st January 2004, 1000 – 12% Debentures of Rs. 100 each of Shiva Ltd. were held as investment by Mr. Dharmesh at a cost of Rs.91,000. Interest is payable on 31st December. (16)

On 1st April 2004, Rs. 20,000 of such debentures were purchased by Dharmesh @ Rs. 98 cum-interest.
On 1st September 2004, Rs. 30,000 of such debentures were sold at Rs. 96 ex-interest.
On 1st December 2004, Rs. 50,000 of such debentures were sold at Rs. 99 cum-interest.

Interest is received on due date.

Prepare Investment account for 12% debentures of Shiva Ltd. In the books of Mr. Dharmesh valuing closing stock as on 31st December 2004 applying AS – 13. The debentures were quoted at Rs. 93 on 31st December 2004.


Q. 8. M/s. Chetan International, an Indian exporter, sells goods to Rex and Co. of New York invoicing $ 1,45,000 on 31st December, 2003. The exchange rate of the time of invoice was Rs. 47 for one $. M/s. Chetan International received remittance of $ 1,00,000 on 1st March 2004. The rate of exchange on 1st March 2004 was Rs. 48. The local bank deducted their charges of Rs. 1,000 while crediting the amount in the account of M/s. Chetan International. The balance amount was paid by Rex & Co. on 10th April 2004 on which date the rate of exchange was Rs. 46 for one $. The local bank charges debited by bank Rs. 200.

M/s. Chetan International follows financial year as accounting year. The exchange rate on 31st March 2004 was 1$ = Rs. 46.50.

Pass journal entries to record above transactions in the books of M/s. Chetan International and also prepare Rex & Co. Account. (16)


Q. 9. Write Short notes on any four of the following :-

1) Buy Back of shares
2) Contingent liabilities
3) Internal Reconstruction Vs. External Reconstruction.
4) Super Profit method of Goodwill valuation
5) Importance of accounting standards
6) Basis of allocation of expenses in pro and post incorporation period