CA-Inter-Accounts Iqtdar-Malik

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CA- INTERMIDIATE
SOLUTIONS OF
ACCOUNTING
FOR NOV 2022
BY
CA. IQTIDAR A. MALIK
(B.COM (H), FCA, CS)

SOLUTION CA INTERMIDIATE GROUP 1- ACCOUNTING NOV 2022 2
DISCLAIMER
SOLUTIONS ARE MADE ON THE BASIS OF MY OWN ASSUPMTIONS, INSTITUTE
ASSUMPTIONS
MAY BE DIFFERNET.
SUGGESTIONS AND FEEDBACK ARE WELCOMED.

REGARDS
CA. IQTIDAR A. MALIK
Email: caiamalik@gmail.com
CA IQTIDAR A. MALIK [B.COM, FCA, CS]

ANSWER TO QUESTION NO 1 (a)
Finished goods Per unit `

• Materials consumed 225
• Direct Labour 75
• Direct Variable overheads 60
• Fixed overheads (` 1,00,000/20,000 units) 5
Total Cost per unit of finished goods B 365
Raw Material A Per unit `
Cost price 150
Freight inward 10
Total Cost per unit of Raw Material A 160
Statement Showing Valuation of Inventories
Units Rate Amounts (`)

• Finished Goods B 1600 360 5,76,000
(At Cost ` 365 or NRV ` 360 whichever is lower)
• Raw Material 750 152 1,14,000
(Since Finished Product in which such Raw Material
is to be used is expected to be sold at below cost,
Raw Material will be valued at Replacement Cost)
Total Cost of Closing Stock 6,90,000
ANSWER TO QUESTION NO 1 (b)
Statement showing classification of activities in Cash Flow statement

Items Activities
Dividend paid for the year Financing
TDS on interest income earned on investments made Investing
Loans and Advances given to suppliers and interest earned from them Operating
Deposit with a bank for a term of 2 years Investing
Highly liquid marketable securities (without risk of change in value Cash & Cash Equivalent
Investment made and dividend earned on them Investing
Insurance claim received against loss of stock or loss of profits Operating
Loans and Advances given to subsidiaries and interest earned on Investing
them
Issue of bonus shares Nowhere in Cash flow
statement because not a flow of
cash
Terms Loan repaid Financing

ANSWER TO QUESTION NO 1 (c)
(i)
Forward Contract
Forward Rate for 4 months on 31-12-21 ` 78.85/$
Exchange Rate on 31-12-21 ` 77.50/$
Amount Payable in $ after 4 months $ 20,000
Loss on Forward Contract (78.85 – 77.50) ` 1.35/$
Total Loss ($20,000 X 1.35) ` 27,000
Treatment as per AS 11:
Such loss will be allocated over the period of forward contracts i.e. 4
months.
• Loss of 3 months will be charged to Profit & Loss for the year ended
31-03-22 (27,000/4) x 3 = ` 20,250
• Loss of 1 month ` 6,250 will be charged in 2022-23
(ii)
Trade Payables
Trade payable in Rupees ` 9,75,000
Divided by Exchange rate on the date of purchase 75
Trade payable in Dollars $ 13,000
Exchange loss for the year ended 31-03-22 (13,000 X (79 – 75) ` 52,000
Exchange Gain on 1-05-22 (13,000 X (79 – 78.30) ` 9,100
Treatment as per AS 11:
Loss ` 52,000 will be transferred to Profit & Loss a/c for the year ended 31-03-22
Gain ` 9,100 will be transferred to Profit & Loss a/c for the year ended 31-03-23
ANSWER TO QUESTION NO 1 (d)
(i) As per AS 13, ‘Accounting for Investments’, If Investment in equity shares are acquired with
an intention to hold for long term period (more than one year), then these should be
considered as long-term investment to be shown at cost in the Balance Sheet of the
company. However, provision for diminution should be made to recognize a decline, if
decline is other than temporary. In the given question, investments in shares of Rachel Ltd
costing ` 1,00,000 are long term, but such Investments in shares of ` 1,00,000 are valued at
Market Value ` 55,000 because decline seems other than temporary because company is
suffering cash losses with declining market sharers.
(ii) As per AS 13, ‘Accounting for Investments’, for investment in shares - if the investment is
purchased with an intention to hold for short-term period (less than one year), then it will
be classified as current investment and to be carried at lower of cost and fair value, i.e., in
the given question, Shares of ` 5,00,000 in books of Garry Ltd are Current Investment, So
are Valued at lower of cost ` 5,00,000 and market value ` 3,20,000 (4,000 x ` 80) as on 31
March 2022, i.e., Valued at ` 3,20,000.

ANSWER TO QUESTION NO 2(a)
Trading A/c for the year ended on 31-03-2022

Particulars ` Particulars `
To opening stock 5,25,000 By sales 48,00,000
To purchase 37,35,000 By closing stock 4,20,000
To Gross profit (B/f) 9,60,000
52,20,000 52,20,000
GP Ratio = 9,60,000/48,00,000 X 100= 20%
Memorandum Trading A/c for the year ended on 1-04-2022 to 28-09-2022

Particulars ` Particulars `
To opening stock 4,20,000 By sales 33,30,000
To purchase 27,22,000 Less: Sale which not
Add: Good Received Dispatched (90,000)
without invoice 1,20,000 28,42,000 Less: Sale on Approval (1,00,000) 31,40,000
To Gross profit 6,28,000 By Stock with customer
(31,40,000 x 20%) (1,00,000 – 20%) 80,000
By cost of goods given as
advertisement (90,000 – 20%) 72,000
By Stock on the Date of Fire 5,98,000
(Balancing figure)
38,90,000 38,90,000
Statement of loss by fire

Particulars `
Value of stock immediately before fire 5,98,000
Less: Salvage stock 62,500
Actual Loss 5,35,500
Claim = Actual Loss × Sum insured/ value of stock on the date of fire
= 5,35,500 × 5,00,000/5,98,000 = ` 4,47,742

In the books of saurabh
Investment in Equity Shares of BT Ltd.
Date Particulars No. Income Cost Date Particulars No. Income Cost
1.4.21 To balance b/d @ 7 10,000 -- 70,000 12.9.21 By Bank A/c -- 9,000 --
4.7.21 To Bank A/c (Sale of Right)
(7,500 X 10) 7,500 -- 75,000 19.9.21 By Bank -- 5,000 3,750
5.8.21 To Bonus Shares 3,500 -- -- 1.12.20 (Dividend)
(17,500×1/5) 11.12.21 By Bank (Sale) 7,500 -- 60,000
1.12.20 To Profit on Sale (wn1) -- -- 9,554 31.3.22 By Balance c/d 13,500 -- 90,804
31.3.21 To P & L a/c (b/f) -- 14,000 --
21,000 14,000 1,54,554 21,000 14,000 1,54,554

Wn 1- Calculation of Profit on sale:
Sale Proceeds (7,500 X 8) 60,000
Less: Cost of Sale of 7,500 Share
𝟕𝟎,𝟎𝟎𝟎+𝟕𝟓𝟎𝟎𝟎−𝟑,𝟕𝟓𝟎
( )𝑿 𝟕𝟓𝟎𝟎 50,446
𝟐𝟏,𝟎𝟎𝟎
Profit on Sale 9,554

Branch Stock a/c

Particular Amounts (`) Particular Amounts (`)
To balance b/d 60,000 By Goods Sent to Br. A/c (Return) 3,000
To Goods Sent to Br. A/c 1,51,800 By Cash Sales 69,000
(1,50,000 + 1,800) By Credit Sales 63,000
By Reduction in Sale Price 1,500
By Normal Loss (Balancing Figure) 600
By Balance c/d
• In hand 72,900
• In transit 1,800 74,700
2,11,800 2,11,800
Branch Debtors a/c

To Balance b/d 40,000 By Cash 48,000
To Credit Sales 63,000 By Bad debts 2,000
By Discount allowed 1,500
By balance c/d (b/f) 51,500
1,03,000 1,03,000
Branch Adjustment a/c

To Normal Loss 600 By Opening Stock Reserve 22,500
To Closing Stock Reserve 28,013 (60,000 X 60/160)
(74,700 X 60/160) By GSTB (Loading) 55,800
To Reduction in selling price 1,500 (1,51,800 – 3,000) X60/160)
To Branch P & L (b/f) 48,187
78,300 78,300
Branch P & L a/c

To Branch expenses 18,000 By Branch Adjustment a/c 48,187
To Bad debts 2,000
To Discount Allowed 1,500
To Profit (b/f) 26,687
48,187 48,187


Statement of Affairs
As at 31st March 2021
Liabilities Amounts (`) Assets Amounts (`)
Capital (Balancing Figure) 3,23,400 Stock 20,900
Creditors 5,500 Debtors 1,100
Machinery 2,20,000
Cash 2,200
Bank (Wn 1) 84,700
3,28,900 3,28,900
Statement of Affairs
As at 31st March 2022
Liabilities Amounts (`) Assets Amounts (`)
Capital (Balancing Figure) 3,60,800 Stock 31,900
Creditors 4,300 Debtors (3,200 – 2700) 500
Machinery 2,86,000
(2,20,000 + 66,000)
Cash 3,300
Bank (Wn 1) 43,400
3,65,100 3,65,100
Statement Showing Profit for the year ended 31-03-21
Capital as at 31-03-21 3,23,400

Add: Drawing (770 X 2) 1,540
3,24940
Less: Capital on 1-1-21 (Bank Balance) 3,30,000
Loss for the period ended 31-03-21 5,060
Statement Showing Profit for the year ended 31-03-22
Capital as at 31-03-22 3,60,800

Add: Drawing (770 X 12) 9,240
3,70,040
Less: Capital on 31-03-21 3,23,400
Profit for the period ended 31-03-22 46,640
Wn 1.
Bank ’s a/c
Date Particulars Amounts (`) Date Particulars Amounts (`)
1-1-21 To balance b/d 3,30,000 2020-21 By Machinery 2,20,000
‘’ By Cash (withdrawal) 25,300
31-03-21 By Balance c/d 84,700
3,30,000 3,30,000
1-4-21 To balance b/d 84,700 2021-22 By Machinery 66,000
2021-22 To Cash (Deposits) 2,53,000 31-03-22 By Cash (withdrawal) 2,31,000
‘’ To Debtors 2,700 By Balance c/d 43,400
(Suresh)
3,40,400 3,40,400

ANSWER TO QUESTION NO 4
Balance sheet of Anmol Ltd as at 31.03.2022

Particulars Notes Amounts (`)
I- Equity and Liabilities
1. Shareholders’ funds
(a) Share Capital 1 10,00,000
(b) Reserve & Surplus 2 24,76,462
2. Long term Borrowing
Terms Loan (1,02,00,000 – 17,00,000 C.L.) 85,00,000
(Secured by Hypothecation of P & M)
3. Current Liabilities
Trade Payables 55,08,875
Bills Payable 1,25,000
Other Current Liabilities 3 18,76,500
Short Term Provisions 79,488
(Prov for tax 1,16,988 – 37,500 Adv tax)
Total 1,95,66,325
II- Assets
1. Non-Current Assets
Tangible
Properties, Plants & Equipment & Intangibles
Tangibles 4 1,11,70,700
2. Current Assets
(a) Inventories 11,37,500
(b) Trade Receivables 5 61,51,250
(c) Cash & Equivalents (9,75,000 + 1,31,875) 11,06,875
Total 1,95,66,325
Profit & Loss Statement for the Period ended 31.03.2021

Particulars Notes Amounts (`)
I- Revenue From Operations 1,25,87,000
II- Other Incomes (Commission) 72,500
Total Revenue 1,26,59,500
III- Expenses:
Purchase 82,95,000
Changes in value of Inventories (11,37,500 – 9,25,000) (2,12,500)
Employees Benefits Expenses (12,72,000 + 1,56,500 o/s) 14,28,500
Finance Cost (Interest on Terms Loan) 8,05,000
Depreciation & Amortization Expenses 4 7,80,300
Other Expenses 6 10,95,250
Total Expenses 1,21,91,550
Profit before tax (Total Revenue – Total Expenses) 4,67,950
Less: Provision for Tax (4,67,950 X 25%) 1,16,988
Profit After Tax 3,50,962

Note 1 – Share Capital

Amounts (`)
Authorized Capital:
2,00,000 Equity Shares of ` 10 each 20,00,000
20,00,000
Issued & Subscribed :
1,00,000 Equity Shares of ` 10 each 10,00,000
Total 13,00,000
Note 2 – Reserve & Surplus

Amounts (`)
Securities Premium 2,50,000
General Reserves 10,00,000
Add: from current year Profit 1,00,000 11,00,000
Profit & Loss:
Opening Balance 8,75,500
Add: Profit After Tax 3,50,962
Less: Transfer to General Reserve (1,00,000) 11,26,462
Total 24,76,462
Note 3 – Other Current Liabilities
Terms Loan payable within one year 17,00,000

Wages outstanding 1,56,500
Rent outstanding 20,000
Total 18,76,500
Note 4 – Tangible Fixed Assets
Land 24,00,000
Factory Budling 36,80,000
Less: Provision for Depreciation (1,84,000 + 1,74,800) (3,58,800) 33,21,200
Plant & Machinery 62,50,000

Less: Prov for Depreciation (9,37,500 + 5,31,250) (14,68,750) 47,81,250
Furniture & Fittings 8,25,000

Less: Prov for Depreciation (82,500 + 74,250) (1,56,750) 6,68,250
Total
Note 5 – Trade Receivable
Trade Receivables (` 85,600 are due for more than 6 Months) 64,75,000
Less: Prov for D.D. (64,75,000 X 5%) (3,23,750)
Total 61,51,250

Note 6 – Other Expenses

Amounts (`)
Rent (2,20,000 + 20,000 o/s) 2,40,000
Rates & Taxes 50,000
Selling & Distribution Expenses 4,36,000
Director fees 32,000
Bad debts 38,500
Increase in Provision for D.D (3,23,750 – 25,000 opening) 2,98,750
Total 10,95,250
Note: Dividend is declared in next accounting year, so it will not be considered in current
year and will be shown in notes to accounts.

9% Debentures a/c
Date Particulars Amt (`) Date Particulars Amt (`)
31-5-21 To own debentures 7,84,000 1-4-21 By Balance b/d 50,00,000
(8000 X 98)
To Profit on Cancellation 16,000
1-1-22 To own debentures 9,87,500
(10,000 X 101) – 22,500
To Profit on Cancellation 12,500
31-03-22 To Bank 32,00,000
50,00,000 50,00,000
Debentures Redemption Reserve a/c

31-5-21 To General Reserve 80,000 1-4-21 By Balance b/d 5,00,000
(800000 X 10%)
1-1-22 To General Reserve 1,00,000
(10,00,000 X 10%)
31-03-22 3,20,000
5,00,000 5,00,000
8.75% Debentures Redemption Reserve Investment a/c

Date Particulars Amounts (`) Date Particulars Amounts (`)
1-4-21 To Balance b/d 5,00,000 31-05-21 By Bank (Sale) 1,20,000
‘’ To Bank 2,50,000 (8,000 X 100 X 15%)
(Purchase) 1-1-21 By Bank (Sale) 1,50,000
(10,000 X 100 X 15%)
30-03-22 By Bank 4,80,000
7,50,000 7,50,000
Interest on Debentures a/c

31-05-21 To Bank a/c 12,000 31-03-22 By P & L a/c 3,67,500
(8000 X 100 X 9% X 2/12)
30-09-21 To Bank a/c 1,89,000
(42,00,000 X 9% X 6/12)
01-01-22 To Bank a/c 22,500
(10,00,000 X 9% X 3/12)
31-03-22 To Bank a/c 1,44,000
(32,00,000 X 9% X 6/12)
3,67,500 3,67,500

Departmental Trading and Profit & Loss a/c

For the year ended 31st March 2022
Particular Deptt A Deptt B Particular Deptt A Deptt B
To Opening Stock 1,25,000 4,20,000 By Sales 15,50,000 30,40,000
To Purchase 12,60,000 22,90,000 By Closing Stock 3,47,500 5,36,000
To Wages 1,25,000 5,60,000
To Gross Profit 3,87,500 3,06,000
18,97,500 35,76,000 18,97,500 35,76,000
To Carriage outward 13,508 26,492 By Gross Profit 3,87,500 3,06,000
(In sales ratio)
To Net Profit 3,73,992 2,79,508
3,87,500 3,06,000 3,87,500 3,06,000
G.P. Ratio of Deptt A for 2021-22 = (3,87,500/15,50,000) X 100 = 25%
General Profit & Loss a/c

Particular Amounts (`) Particular Amounts
To Rent 60,000 By Departmental NP (`)
To Other Admin Expenses 1,55,000 • Deptt A 3,73,992
To Closing Stock Reserve • Deptt B 2,79,508 6,53,500
(5,36,000 X 80% X 25%) 1,07,200 By Opening Stock Reserve
To Profit Carried to B/S 3,98,500 (4,20,000 X 80% X 20%) 67,200
7,20,700 7,20,700
Important Notes:
1. In the absence of information, carriage outward is distributed in the ration of sales and Rent
and Other Admin expenses are debited to General P&L A/C
2. IDT are included in sales of Deptt A and Purchase of Deptt. B

Statement showing Interest and Cash price

Installment No. Amount of Installment Interest (10% p.a.) 5% for half year Cash price
(a) (b) (a – b)
5th Installment 60,000 60,000 X 5/105 = ` 2,857 57,143
4th Installment 60,000 (60,000 + 57,143) X 5/105
= ` 5,578 54,422
3rd Installment 60,000 (60,000 + 57,143 + 54,422) X 5/105
= ` 8,170 51,830
2nd Installment 60,000 (60,000 + 57,143 + 54,422 + 51,830)
X 5/105 = ` 10,638 49,362
1st Installment 60,000 (60,000 + 57,143 + 54,422 + 51,830 +
49,362) X 5/105 = ` 12,988 47,012
Total 3,00,000 40,231 2,59,769

Statement Showing Effects on Assets, Liability and Equity
For the year ended 31-03-22
Particulars Assets - liabilities Equity
Assets Liabilities
Opening Balance 12,00,000 3,00,000 9,00,000
Liability settled at 2% discount (49,000) (50,000) 1,000
New Equation 11,51,000 2,50,000 9,01,000
Dividend earned 15,000 -- 15,000
New Equation 11,66,000 2,50,000 9,16,000
Rent Paid (20,000) -- (20,000)
New Equation 11,46,000 2,50,000 8,96,000
Drawing for Personal use (15,000) -- (15,000)
New Equation 11,31,000 2,50,000 8,81,000
Received against Bills 15,000
Receivable (15,000)
New Equation 11,31,000 2,50,000 8,81,000

ANSWER TO QUESTION NO 6 (c)

Journal Entries
Date Particulars L.F. Amounts Amounts
31-03-22 Pref Share Capital a/c Dr. 9,00,000
Premium on Redemption a/c Dr. 45,000
To Pref Share holder a/c 9,45,000
(Being Redemption due on 9000 shares)
31-03-22 Securities Premium a/c Dr. 45,000
General Reserve a/c Dr. 7,00,000
To Premium on Redemption a/c 45,000
To CRR a/c 7,00,000
(Being premium written off and CRR created)
Note: Securities Premium ca be used only for
Premium written off
31-03-22 Bank a/c Dr. 2,00,000
To Equity Share Capital a/c 2,00,000
(Being Fresh Shares are issued to the extent
replacement of capital required)
ANSWER TO QUESTION NO 6 (d)
Statement showing effective capital

`
Share capital 1,05,73,000
Capital Reserve (assumed realized in cash) 90,000
Securities Premium 67,000
Public Deposits 14,50,000
Less: Accumulated Losses (10,25,000)
Total Capital 1,11,55,000
Less: Non-Trade Investments (50,00,000)
Effective Capital 61,55,000
Comment: Since, Effective capital is less than ` 5 crores, so maximum remuneration will be
60,00,000 p.a.

ANSWER TO QUESTION NO 6 (e)

Accounting Standards are the written policy documents issued by Government or expert accounting
bodies covering the aspect of measurement, treatment, presentation and disclosure of accounting
transactions and events.
Following are the objectives of Accounting Standards:
(a) Accounting Standards harmonize the diverse accounting policies and practices followed by
different companies in India.
(b) Accounting Standards facilitates the preparation of financial statements and make them
comparable.
(c) Accounting Standards give a sense of faith and reliability to the users.
The main advantage of setting accounting standards are as follows:

(a) Accounting Standards makes the financial statements of different companies comparable which
helps investors in decision making.
(b) Accounting Standards prevent any misleading accounting treatment.
(c) Accounting Standards prevent manipulation of data by the management.


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SUGGESTIONS AND FEEDBACK ARE WELCOMED.

CA IQTIDAR A. MALIK [B.COM, FCA, CS]

ANSWER TO QUESTION NO 1 (a)

Finished goods Per unit `

Units Rate Amounts (`)

ANSWER TO QUESTION NO 1 (b)

Statement showing classification of activities in Cash Flow statement

CA IQTIDAR A. MALIK [B.COM, FCA, CS]

ANSWER TO QUESTION NO 1 (c)

ANSWER TO QUESTION NO 1 (d)

CA IQTIDAR A. MALIK [B.COM, FCA, CS]

ANSWER TO QUESTION NO 2(a)

Trading A/c for the year ended on 31-03-2022

Memorandum Trading A/c for the year ended on 1-04-2022 to 28-09-2022

Statement of loss by fire

ANSWER TO QUESTION NO 2 (b)

21,000 14,000 1,54,554 21,000 14,000 1,54,554

CA IQTIDAR A. MALIK [B.COM, FCA, CS]

ANSWER TO QUESTION NO 3 (a)

Branch Stock a/c

Branch Debtors a/c

Branch Adjustment a/c

Branch P & L a/c

CA IQTIDAR A. MALIK [B.COM, FCA, CS]

ANSWER TO QUESTION NO 3 (b)

Statement Showing Profit for the year ended 31-03-21

Capital as at 31-03-21 3,23,400

Statement Showing Profit for the year ended 31-03-22

Capital as at 31-03-22 3,60,800

CA IQTIDAR A. MALIK [B.COM, FCA, CS]

Balance sheet of Anmol Ltd as at 31.03.2022

Profit & Loss Statement for the Period ended 31.03.2021

CA IQTIDAR A. MALIK [B.COM, FCA, CS]

Note 1 – Share Capital

Note 2 – Reserve & Surplus

Note 3 – Other Current Liabilities

Terms Loan payable within one year 17,00,000

Note 4 – Tangible Fixed Assets

Plant & Machinery 62,50,000

Furniture & Fittings 8,25,000

Note 5 – Trade Receivable