Question 6 (a) The following information is provided for the year ended 31st March, 2024: (i) AX Limited holds 70% shares of BX Limited (ii) BX Limited holds 30% shares of CX Limited (iii) DX Limited holds 40% shares of in CX Limited (iv) DX Limited holds 49% shares in EX Limited You are required to: (i) Identity the related parties for the reporting entities – AX Limited, CX Limited and EX Limited. (ii) If DX Limited would have sold its investment in EX Limited on 1st October, 2023, but goods were continued to be supplied by DX Limited to EX Limited throughout the year, will this scenario change your answer with respect to any of the reporting entity mentioned in point (i)? ADVANCED ACCOUNTING Give reasons for your answer as per AS 18. (4 Marks) OR (a) Given below is the Balance Sheet of Sky and Associates as on 31st March,2023: Liabilities ` Assets ` Capital 1,60,000 Machinery 1,80,000 Profit & Loss Account 93,000 Stock 1,15,000 8% Loan 40,000 Trade Receivables 75,000 Trade Payables 66,000 Deferred Expenditure 9,000 Bank Overdraft 20,000 3,79,000 3,79,000 Additional information: (1) The firm is planning to shut down its business with immediate effect from 1stApril, 2024. (2) The sale and purchase of the firm for the year 2023-24 amounts to ` 8,20,000 and ` 6,50,000 respectively. (3) The value of Closing Stock as on 31-3-2024 was ` 65,000. The net realizable value is estimated at 120% of cost. (4) Other expenses for the period amount to ` 25,000. (5) Deferred expenditure is getting amortized over 5 years starting form 31-3-2022. (6) The remaining life of Machinery is expected to be 3 years. The realizable value of Machine is expected at ` 1,65,000, an expense of ` 5,000 is to be incurred to realize the same. (7) Out of trade receivables, ` 5,000 is expected to be unrealizable due to an ongoing dispute. (8) Bank has charged a penalty of ` 2,500 for crossing the overdraft limit. (9) The lender has agreed to forgo 50% of interest charge for the year. (10) The firm is expecting a discount of ` 4,000 from creditors at the time of full and final settlement. You are required to prepare a Profit & Loss A/c for the year ended 31st March, 2024 to ascertain its Profit/Loss for the period. (4 Marks) (b) Following information are available in respect of Z Limited as on 31st March, 2024: 4,00,000 Equity share capital of ` 10 each ` 40,00,000 Capital Reserve ` 20,000 Revenue Reserve ` 50,00,000 Securities Premium ` 6,00,000 Profit and Loss Account ` 19,00,000 Investments ` 40,00,000 The company decides to buy back 20% of its Equity capital @` 15 per share on 1st April, 2024. Buy back is as per provisions of the Companies Act and company passed the necessary resolutions for it. For this purpose, it sold its investments of ` 40 lakhs for ` 32 lakhs. You are required to pass the necessary journal entries. (4 Marks) (c) Give Journal Entries (with Narrations) in the books of an Independent Branch of a business entity to rectify or adjust the following: (i) Commission (income) of ` 7,500 allocated to Branch by Hand office but still no entry is passed in the books of branch. (ii) Head office paid ` 12,000 directly to one of branch’s supplier. The intimation is received by branch on reconciliation of bank statement of branch with its books. (iii) A remittance of ` 85,000 is sent by branch to Head office has not been received by Head office till date. (iv) Branch paid ` 9,800 as salary to Head office’s employee, but the amount paid has been wrongly debited to salary account. ADVANCED ACCOUNTING (v) Branch purchased Furniture for ` 18,000 through cheque, but the Furniture account was retained in Head office Books. No entry has yet been passed. (vi) Branch incurred ` 5,500 of expenses on behalf of other branches of head office, this transaction was not recorded in the books of branch. (6 Marks)