SRISHTI ACADEMY

Answer

 Insurance Claim, Avg Due Date, Account Current, AS. 6.10

Test No – 1                                         Time – 2 Hrs                          Total Marks – 60

Q.1                                                                                                                              [M-15]

Memorandum Trading Account for the period 1st April, 2012 to 29th August 2012

		Rs.		Rs.
To Opening Stock		7,90,100	By Sales	45,36,000
To Purchases	33,10,700		By Closing stock (Bal. fig.)	8,82,600
Less: Advertisement	(41,000)
Drawings	(2,000)	32,67,700
To Gross Profit [30% of Sales -           Refer Working Note]		13,60,800
		54,18,600		54,18,600

Statement of Insurance Claim

	Rs.
Value of stock destroyed by fire	8,82,600
Less: Salvaged Stock	(1,08,000)
Add: Fire Fighting Expenses	4,700
Insurance Claim	7,79,300

Note: Since policy amount is more than claim amount, average clause will not apply. Therefore, claim amount of Rs.7,79,300 will be admitted by the Insurance Company.

Working Note:

Trading Account for the year ended 31st March, 2012

	Rs.		Rs.
To Opening Stock	7,10,500	By Sales	80,00,000
To Purchases	56,79,600	By Closing stock	7,90,100
To Gross Profit	24,00,000
	87,90,100		87,90,100

Rate of Gross Profit in 2011-12

Gross Profit  X 100  = 24,00,000  X 100 = 30%   

   Sales                           80,00,000

 Q.2                                                                                                                             [M-10]

Calculation of amount of claim	Rs.	Rs.
Value of stock as on 8th July, 2014 (Refer W.N.)	2,03,000	16,00,000
Less: Value of stock remaining unaffected by fire
Agreed value of damaged goods	1,97,000	(4,00,000)
Loss of stock		12,00,000

Applying average clause:           Amount of policy    x Loss of stock

Amount of claim                    =    Stock on the date of fire

=  Rs. 10,00,000  x 12,00,000

     Rs. 16,00,000

  = Rs. 7,50,000

Working Note:

Memorandum Trading Account for the period from 1st April, 2014 to 8th July, 2014

Particulars		Rs.	Particulars		Rs.
To	Opening Stock	15,72,000	By	Sales		52,60,000
To	Purchases	37,10,000	By	Closing Stock (Bal.Fig.)		16,00,000
To	Gross Profit (30% of sales)	15,78,000
		68,60,000			68,60,000

Q.3                                                                                                                              [M-10]

M/s DEF & CO.

Memorandum Trading A/c (1.4.14 to 13.9.14)

Particulars	(Rs.)	Particulars	(Rs.)
To Opening stock (Refer W.N.)	9,60,000	By Sales	45,98,200
To Purchases	35,49,900	By goods with customer	18,750
To Gross profit (25% of sales)	11,49,550	By Closing stock (bal. fig.)	10,42,500
	56,59,450		56,59,450

Computation of insurance claim

		Rs.
Stock on the date of fire (i.e. on 13.09.2014)		10,42,500
Less: Stock salvaged	40,000
Agreed value of damaged stock	20,000	(60,000)
Loss of stock		9,82,500

Claim subject to average clause:

Insurance claim          =                      Loss of stock

                                                Value of stock on the date of fire

´          Amount of policy

=          9,00,000/10,42,500  x  9,82,500 = Rs. 8,48,201

Working Notes:

1.          Calculation of original cost of the stock as on 31st March, 2014

Stock as on 31st March, 2014 was valued at 10% lower than cost.

Hence, original cost of the stock would be Rs. 9,60,000 (8,64,000/90  100)

2.          Purchases for the period of 1.4.14 to 13.9.14

	Rs.
Purchases	35,29,900
Add: purchases where goods have been received in godown although purchase invoice had not been received	60,000
Less: Purchase of machinery included in purchases	40,000
	35,49,900

3. Sales for the period of 1.4.14 to 13.9.14

	Rs.
Sales	46,93,200
Less: goods not been dispatched	70,000
Less: goods sent on approval basis but not yet confirmed	25,000
	45,98,200

4. Goods with customer on 13.9.14

Since no approval for sale has been received for the goods for Rs. 25,000 These should be valued at cost i.e. 25,000 – 25,000 x 25/100 = 18,750

Q.4                                                                                                                              [M-10]

Depreciation to be charged in the Profit and Loss Account

	Rs.
Depreciation on old Machinery [20% on Rs. 6,32,000 for 3 months (01.4.14 to 30.6.14)]	31,600
Add: Depreciation machinery acquired on 01.06.2014
(Rs. 1,20,000 x 20% x 10/12) Depreciation on Machinery after adjustment of Exchange [20% of Rs. (6,32,000 - 1,89,000 + 2,56,000) for 9 months]	20,000 1,04,850
Total Depreciation to be charged in Profit and Loss A/c	1,56,450

(ii) Loss on exchange of Machinery

	Rs.
Book value of machinery as on 01.04.2014	1,89,000
Less: Depreciation for 3 months	(9,450)
WDV as on 30.06.2014	1,79,550
Less: Exchange value	(1,75,000)
Loss on exchange of machinery	4,550

Q.5                                                                                                                              [M-5]

Calculation of cost of fixed asset

Particulars	Rs.
Materials	10,00,000
Direct labour (1/6th of Rs. 3,00,000)	50,000
Direct expenses	2,00,000
Office and administrative expenses (5% Rs. 7,50,000)	37,500
Depreciation on assets	10,000
Total Cost of fixed asset	12,97,500

Q.6                                                                                                                                          [M-5]

Calculation of number of days from base date

Transaction date	Due date	Amount `	No. of days from Base date (Base date 19.6.2014)	Product
8.3.2014	11.7.2014	4,000	22	88,000
16.3.2014	19.6.2014	5,000	0	0
7.4.2014	10.9.2014	6,000	83	4,98,000
17.5.2014	20.8.2014	5,000	62	3,10,000
		20,000		8,96,000

Average due date      = Base date + Total of Product

                                                            Total of Amount

= 19.6.2014 + Rs. 8,96,000 / Rs. 20,000

= 19.6.2014 + 45 days approximately = 3.8.2014

Q.7                                                                                                                                          [M-10]

In the books of Bank

Account Current of Mr. Abhinav for the month ending April 2015

Date    Particulars                 Dr.                  Cr.       Dr. or Cr.        Balance          Days   Product

2015                                                                           

1st April          By Cash          -                       40,000      Cr.              40,000             -           -

5th April         To Cash          1,20,000          -                Dr.              80,000             5          4,00,000

10th April       By Cash          -                       60,000      Dr.              20,000             5          1,00,000

15th April       To interest       164                  -                Dr.              20,164             1          20,164

16th April       To Cash          80,000             -                Dr.              1,00,164          2          2,00,328

18th April       By Cash          -                       68,000       Dr.             32,164             7          2,25,148

25th April       To cash           1,00,000          -                Dr.              1,32,164          5          6,60,820

30th April       To Interest A/c  364                               Dr.              1,32,528          -           -

Working notes

1.         Interest from 1st April, 2015 to 15th April, 2015

(Products for the period x rate of interest)/365

5,00,000 x 12/100)/365 = Rs. 164.

2.         Interest from 16th April, 2015 to 30th April, 2015 (Products for the period x rate of interest)/365 (11,06,460 x 12/100)/365 = Rs. 364