NAME OF THE BOOK --- ULTIMATE BOOK OF ACCOUNTANCY CBSE 2022-23

Ultimate Sample Paper – 1

CBSE Examination – 2022-23
By Dr. Vinod Kumar
Author of Ultimate Book of Accountancy

1. X and Y are partners in a firm sharing profits and losses in the ratio of 5:4. They admit a [1]
new partner Z and decide that the profit sharing ratio between Y and Z shall be same as
existing between X and Y. (Source: Ultimate Book of Accountancy CBSE class 12th)
New Profit sharing ratio of the partners:
(a) 5:4:3 (b) 5:4:2
(c) 25:20:15 (d) 25:20:16

2. Assertion (A): [1]

Other than Partnership Act 1932, A partnership firm must follow the Indian Contract Act
and Stamp Act.
Reason (R):
Every person joining partnership firm must be competent to contract as per the Indian
Contract Act. For registration of a partnership firm, it should be properly drafted as per
the provisions of Stamp Act and to be submitted to the Registrar of Firms.

(a) Only (A) is Correct but (R) is wrong

(b) Both (A) and (R) are correct but (R) is not the correct explanation of (A)
(c) Both (A) and (R) are incorrect
(d) Both (A) and (R) are correct and (R) is the correct explanation of (A)

3. Find out the correct order of Capital: [1]

(a) Nominal Capital, Subscribed Capital, Issued Capital
(b) Issued Capital, Nominal Capital, Subscribed Capital
(c) Authorised Capital, Issued Capital, Subscribed Capital
(d) Subscribed Capital, Issued Capital, Authorised Capital

OR
For___________The amount payable on maturity is stated but the rate of interest is not
stated. (Source: Ultimate Book of Accountancy CBSE class 12th)
(a) Secured Debentures (b) Unsecured Debentures
(c) Redeemable Debentures (d) Zero Coupon Bond

4. A, B and C were partners sharing profits in the ratio of 5:3:2. With effect from 1st April 2022, they [1]
agreed to share future profits and losses in the ratio of 2:5:3.
Furniture Book value Rs.2,00,000 and Revised value was found Rs.1,70,000 but they decided to
record the effect of Revaluation without affecting the book value of Furniture.
Which of the following is correct in above case? (Source: Ultimate Book of Accountancy class 12th)
(a) A’s Capital A/c Dr. 30,000
To B’s Capital A/c 20,000
To C’s Capital A/c 10,000

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(b) B’s Capital A/c Dr. 6,000

C’s Capital A/c Dr. 3,000
To A’s Capital A/c 9,000

(c) A’s Capital A/c Dr. 9,000

To B’s Capital A/c 6,000
To C’s Capital A/c 3,000

(d) A’s Capital A/c Dr. 15,000

B’s Capital A/c Dr. 9,000
C’s Capital A/c Dr. 6,000
To Revaluation A/c 30,000

OR

X, Y and Z are partners sharing profits in the ratio of their capitals. Their fixed capitals on
31st March 2022: X Rs.12,00,000; Y Rs.8,00,000 and Z Rs.2,00,000.
Z is Guaranteed a minimum profit of Rs.1,00,000 and deficiency if any will be borne by X
and Y. The firm incurred a loss of Rs.11,00,000. (Source: Ultimate Book of Accountancy class 12th)
Deficiency borne by Y is:
(a) Rs.4,80,000 (b) Rs.80,000
(c) Rs. 40,000 (d) Rs.1,20,000

5. Vinod and Yuvraj are partners sharing profits and losses in the ratio of 5:3. Their Fixed [1]
Capitals balance on 31st March 2022 are: Vinod Rs.6,00,000 and Yuvraj Rs.3,00,000.
Their drawings during the year were Rs.60,000 each. Vinod introduced additional capital
of Rs.2,00,000 on 1st October 2021. Divisible profit during the year 2021-22 was
Rs.80,000. (Source: Ultimate Book of Accountancy CBSE class 12th)
Opening Capital of Vinod is:
(a) Rs.4,00,000 (b) Rs.8,00,000
(c) Rs.4,10,000 (d) Rs.6,10,000

6. Vinod Ltd. issued 10,000, 9% Debentures of Rs.100 each at a premium of 5% and [1]
redeemable after 5 years at a premium of _________
At the time of writing off loss on issue of debentures, statement of profit and loss was
debited with Rs.30,000. (Source: Ultimate Book of Accountancy CBSE class 12th)
Choose the loss on issue of debentures:
(a) Rs.50,000 (b) Rs.30,000
(c) Rs.1,00,000 (d) Rs.80,000

OR

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Vinod Ltd. issued 20,000, 9% Debentures of Rs.100 each at a discount of ______% and to
be redeemed at a premium of 10%. Existing balance of Securities Premium and Statement
of Profit and Loss before issuing these debentures was:
Securities Premium A/c ……………………………………..… Rs.2,00,000
Surplus Balance in Statement of P/L ………………………Rs.1,00,000
After writing off Discount/Loss on issue of Debentures the Balance of Securities Premium
A/c was Nil but Statement of P/L shows Cr. Balance of Rs.40,000.
At what rate of Discount, debentures were issued?
(a) 3% (b) 4%
(c) 5% (d) 6%

7. Vinod Ltd. invited applications for 20,000 shares of Rs.10 each at a premium of 10%. [1]
Company received applications for _________ shares and made pro-rata allotment to all the
applicants. Company refunded excess money Rs.1,10,000 without rejecting any
application. (Source: Ultimate Book of Accountancy CBSE class 12th)
How much total amount was received on applications? Assuming that full amount was
payable on applications.
(a) Rs.2,50,000 (b) Rs.3,00,000
(c) Rs.3,30,000 (d) Rs.3,10,000

8. X, Y and Z sharing profits in the ratio of 5:3:2. Y decided to retire on 31.3.2022 and on his [1]
retirement goodwill appeared in their books Rs.60,000 and General Reserve Rs.20,000.
On the date of Y’s retirement goodwill of the firm was valued at Rs.2,40,000. X and Z
decided to share profits in the ratio of 2:3. Y’s Capital on 1st April 2021 was Rs.2,40,000.
What amount to be paid to Y on his retirement?
(a) Rs.3,00,000 (b) Rs.2,56,000
(c) Rs.2,80,000 (d) Rs.2,96,000

OR

Tom, Jerry and Harry are partners sharing profits in the ratio of 5:3:2. They withdrew the
following amounts during the year for their personal use: Tom Rs.30,000; Jerry Rs.20,000
and Harry Rs.10,000. Interest on drawings to be charged @10% p.a. Firm made a net
profit of Rs.5,000 during the year. (Source: Ultimate Book of Accountancy CBSE class 12th)
While preparing Profit and Loss Appropriation Account, profit or loss transferred to
Harry’s Capital Account Rs. ___________
(a) Profit Rs.400 (b) Profit Rs.1,600
(c) Loss Rs.200 (d) Profit Rs.1,000

9. Read the following hypothetical situation, answer question No. 9 and 10.
Vinod and Satish were partners sharing profits and losses in the ratio of 5:3. On 1st April
2021 their capital accounts showed balances of Rs.7,50,000 and Rs.5,00,000 respectively.
Calculate the amount of profits to be distributed between the partners if the partnership
deed provided for interest on capital @8% p.a. and the firm earned a profit of ______

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for the year ended 31st March 2022. (Source: Ultimate Book of Accountancy CBSE class 12th)
Profit and Loss Appropriation Account

Particulars Amount Particulars Amount

To Interest on Capital By Profit and Loss A/c ……..
Vinod ……….
Satish 36,000
…………. ………..
Note: profit is insufficient, so interest on capital provided in the ratio of appropriations.
[1]
Vinod will get _____________
(a) Rs.60,000 (b) Rs.50,000
(c) Rs.54,000 (d) Rs.56,250

10. Net Profit made by the firm ___________ [1]

(a) Rs.1,00,000 (b) Rs.90,000
(c) Rs.80,000 (d) Rs.60,000

11. Choose the correct sequence of the following transactions in context of Division of [1]
Profits: (Source: Ultimate Book of Accountancy CBSE class 12th)
(i) Transfer to General Reserve
(ii) Distribution of Profit among the partners
(iii) Rent paid to partner
(iv) Transfer of profit to P/L Appropriation Account
Identify the correct sequence:
(a) (iv), (iii), (i), (ii) (b) (i), (iii), (iv), (ii)
(c) (iii), (i), (iv), (ii) (d) (iii), (iv), (i), (ii)

12. If 1,000 shares of Rs.10 each were forfeited for non-payment of first & final call of Rs.5 [1]
per share. All forfeited shares were reissued after a discount (40% of the forfeited
amount). (Source: Ultimate Book of Accountancy CBSE class 12th)
How much amount is to be transferred to the Capital Reserve?
(a) Rs.5,000 (b) Rs.2,000
(c) Rs.3,000 (d) Rs.1,000

13. As per Companies Act, 2013, Securities Premium cannot be utilized for which of the [1]
following purpose? (Source: Ultimate Book of Accountancy CBSE class 12th)
(a) In purchasing own shares of the company (buy back)
(b) In writing off preliminary expenses of the company
(c) Issuing fully paid bonus shares to the members
(d) Writing off bad debts and depreciation on fixed assets

14. X and Y were partners in a firm sharing profits and losses in the ratio of 3:2. They admit [1]
Z as a new partner for 1/4th share. Z brought Rs.3,00,000 as capital. The capitals of X and

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Y were to be adjusted taking Z’s capital as base. Excess or shortage was to be adjusted by
opening current accounts. Adjusted capital of X and Y were Rs.3,94,000 and Rs.2,16,000.
Amount to be adjusted through X’s Current Account ________
(a) Rs.1,50,000 (b) Rs.1,46,000
(c) Rs.2,06,000 (d) Rs.1,44,000

15. Vinod and Satish are partners. Vinod withdrew Rs.2,000 in the beginning of each month. [1]
Interest on his drawings was charged Rs.910.
Rate of interest on drawings was __________
(a) 5% p.a. (b) 6% p.a.
(c) 7% p.a. (d) 8% p.a.

16. At the time of Dissolution of a partnership firm position of Debtors was as follows: [1]
Balance Sheet (Extract only)
Liabilities Amount Particulars Amount
Debtors 72,000
Less: Provision for
Doubtful debts 6,000 66,000
40% of the Debtors were realized at 90% and remaining debtors were sold to a Debt
Collecting Agency for 75%. (Source: Ultimate Book of Accountancy CBSE class 12th)
Total amount realized from debtors __________
(a) Rs.55,320 (b) Rs.56,320
(c) Rs.57,320 (d) Rs.58,320

17. X, Y and Z were partners sharing profits and losses equally. X died on 31st August 2022. [3]
The sales and profits for the year ended 31st March 2022 were Rs.10,00,000 and
Rs.2,00,000. The sales upto 31st August 2022 was Rs.4,50,000.
Calculate X’s Share of profit and give entry for the same. (Source: Ultimate Book of
Accountancy CBSE class 12th)

18. X, Y and Z are partners sharing profits in the ratio of 5:3:2. Rent of Rs.5,000 per month is [3]
to be paid to X for providing office space in his premises. Z was guaranteed a profit of
Rs.8,000 per annum. Deficiency if any will be borne by X and Y in the ratio of 2:1.
At the end of the year 31st March 2022, firm shows a profit of Rs.40,000 before providing
Rent to X. (Source: Ultimate Book of Accountancy CBSE class 12th)
Give necessary journal entries for distribution of profit/loss.

OR

X, Y and Z are sharing profits and losses in the ratio of 5:3:2.

X withdrew Rs.50,000 on 1st September 2021 against anticipated profits.
Y withdrew Rs. 60,000 during the year against anticipated profits.
Z withdrew Rs.80,000 on 1st December 2021 from his capital.
The partnership deed provides for charging interest on drawings @6% p.a. after the
accounts were closed, it was found that interest on drawings was not taken into

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consideration. Give adjustment entry and show your working clearly. (Source: Ultimate
Book of Accountancy CBSE class 12th)

19. Vinod Ltd. took over the assets of Rs.7,80,000 and liabilities of Rs.90,000 of Kyo Ltd., at [3]
an agreed value of Rs.8,10,000. Vinod Ltd., issued 9% Debentures of Rs.100 each at 10%
discount to Kyo Ltd. Company had a balance in Securities Premium A/c Rs.50,000.
Give necessary journal entries. (Source: Ultimate Book of Accountancy CBSE class 12th)
OR
VK Ltd. took over the Assets of Rs.30,00,000 and Liabilities of Rs.10,00,000 of GM Ltd. for
a purchase consideration of Rs.27,37,000. (Source: Ultimate Book of Accountancy class 12th)
VK Ltd. issued 21,488 Equity Shares of Rs.100 each at a premium of 25% and Balance
through a Promissory Note payable after two months.
Give necessary entries for the above.

20. X, Y and Z were sharing profits and losses in the ratio of 5:3:2. They decided to share [3]
future profits and losses in the ratio of 2:3:5 with effect from 1st April, 2022. They decided
to record the effect of the following without affecting their book values:
(i) Profit and Loss Account (Cr. Balance) Rs.24,000
(ii) Advertisement Suspense Account Rs.12,000
Pass necessary adjustment entry.

21. Vinod India Ltd. is registered with an authorized capital of Rs.10,00,000 divided into [4]
1,00,000 Equity Shares of Rs.10 each. The company issued 50,000 Equity Shares at a
premium of Rs.5 per share. Rs.2 per share were payable with application, Rs.8 per share
including premium on allotment and the balance amount on first and final call. The issue
was fully subscribed and all the amount due was received except the first and final call
money on 500 shares allotted to Satish. (Source: Ultimate Book of Accountancy class 12th)
Show ‘Share Capital’ & Reserves and Surplus in Balance Sheet of Vinod India Ltd. as per
the Schedule III of the Companies Act, 2013. Also prepare Notes to Accounts.

22. George, Suraj and Gurmeet are partners. They decided to dissolve their firm. Pass [4]
necessary Journal entries for the following after various assets (other than cash and
bank) and the third party liabilities have been transferred to Realisation Account:
(a) There were total book debts of Rs.38,000. A provision of bad and doubtful debts also
stood in the books at Rs.3,000. Book debts Rs.6,000 proved bad and rest paid the amount
due. (Source: Ultimate Book of Accountancy CBSE class 12th)
(b) George agreed to pay off his wife’s loan of Rs.3,500 at a discount of 5%.
(c) A Laptop which was not recorded in the books was taken over by Suraj at Rs.1,500,
whereas its expected value was Rs.2,500.
(d) A Contingent liability (not provided for) of Rs.2,000 was also discharged.

23. Vinod Limited offered 1,00,000 Equity Shares of Rs.10 each for the public subscription at [6]
a premium of 40% on the face value of share. The amount was payable as follows:
On Application………………………. Rs.6 (including 50% premium)
On Allotment …………………………Rs.6 (including remaining premium)

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On First & Final Call …………………Balance

Applications were received for 2,00,000 shares out of which 25% were rejected and
allotment was made to all the remaining applicants on pro-rata basis. SK who applied for
300 shares failed to pay allotment and call money. VK who applied for 150 shares failed
to pay the call money. These shares were forfeited after the first and final call. SK’s
forfeited shares were reissued by giving a discount of Rs.400. VK’s forfeited shares were
reissued by giving 25% discount (out of the maximum discount available on these
shares). Give necessary journal entries. (Source: Ultimate Book of Accountancy class 12th)
OR

MK Ltd. forfeited 470 Equity Shares of Rs.20 each issued at a premium of Rs.3 per share
for the non-payment of allotment money of Rs.5 along with premium of Rs.3 and First
Call of Rs.5 per share. Final call of Rs.5 per share was not made. Out of the forfeited shares,
235 shares were reissued at Rs.19 each fully paid.
Give entries for the above transactions. (Source: Ultimate Book of Accountancy class 12th)

24. Following is the balance Sheet of A and B as on 31st March 2015, sharing profits in ratio of 5:2: [6]
Liabilities Amount Assets Amount
Capital Accounts: Plant and Machinery 30,000
A 50,000 Land and Building 30,000
B 40,000 90,000 Investment 20,000
General Reserve 14,000 Debtors 12,000
Workmen compensation Reserve 5,000 Stock 20,000
Creditors 21,000 Cash 11,000
P/L A/c 7,000

1,30,000 1,30,000
On 1st April 2015, they admit C into partnership on the following terms:

(i) New profit sharing ratio of the partners will be 2:3:3.

(ii) One of the debtors could not pay Rs. 1,000 and his account is written off as bad debts. A
provision of 5% is to be maintained on the debtors.

(ii) A debtor whose dues of Rs.1,100 were written off two years back, now paid 50% of the amount.

(iii) 40% of the investments were taken over by A and B equally and remaining investments were
sold at a profit of 20%. (Source: Ultimate Book of Accountancy CBSE class 12th)

(iv) Claim against workmen compensation was estimated at Rs.2,200.

(v) Total goodwill of the firm was estimated Rs.5,600. C brings his share of premium for goodwill in
cash and capital as follows: Stock Rs.8,000; Furniture Rs.12,000 and Cash Rs.15,000.

Prepare Revaluation A/c, Partners capital account and balance sheet of new firm.

OR

AK, BK and CK were partners in a firm sharing profits in the proportion of

1/2, 1/3 and 1/6 respectively. on 31-3-2016. The Balance Sheet of the firm o was as follows:

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Liabilities Amount Assets Amount

Capitals: AK 40,000 Cash at Bank on 31-3-2016 4,100
BK 36,500 Debtors 30,000
CK 20,000 Less : Provision 1,000 29,000
General Reserve 9,000 Stock 25,000
Provident Fund 3,000 Investments 10,000
Sundry Creditors 12,600 Patents 5,000
Profit and Loss A/c 12,000 Office Equipment 12,000
Machinery 36,000 + 12,000 48,000
addition made on 1 Dec. 2015
1,33,100 1,33,100
CK retired and It was agreed that:
(a) Goodwill will be valued at Rs. 27,000.
(b) Depreciation of 10% was to be provided on machinery. A part of machinery was purchased
on 1st December 2015 for Rs.12,000.
(c) Patents were to be reduced by 20% and 25% of the Office Equipment sold at a loss of 20%.
(d) Liability on account of Provident Fund was estimated at Rs. 2,300.
(e) CK took over investments for Rs. 15,800.
(f) AK and BK decided to adjust their capitals in proportion of their profit-sharing ratio by
opening current accounts. (Source: Ultimate Book of Accountancy CBSE class 12th)
Prepare Revaluation Account and Partners’ Capital Accounts on CK’s retirement.

25. Ram, Mohan and Sohan were partners sharing profits and losses in the ratio of 5:3:2. On [6]
31st March, 2022 their Balance Sheet showed following amounts:
Capitals: Ram Rs.1,50,000; Mohan Rs.1,25,000 and Sohan Rs.75,000
General Reserve Rs. 30,000
Sohan died on 1st August 2022. Goodwill of the firm was calculated Rs.1,75,000 and
Revaluation Gain was calculated Rs.25,000 on his death by preparing Revaluation
Account. (Source: Ultimate Book of Accountancy CBSE class 12th)
It was agreed that:
For the purpose of calculating Sohan’s share in the profits of 2022-23, the profits should
be taken to have accrued on the same scale as in 2021-22, which were Rs.75,000.
Prepare Sohan’s Capital Account.
26. Vinod Ltd. has the following balances in its Balance Sheet on 31st March 2021: [6]
Securities Premium ………..……………………………………… 35,000

Capital Reserve ……………………………………………………….10,000

On 1st April 2021, Company issued 10,000, Fresh 8% Debentures of Rs.100 each at
a premium of 5% to be redeemable at premium of 10% after 5 years. the entire
amount was payable on application. The issue was oversubscribed to the extent of
10,000 debentures and the allotment was made proportionately to all the applicants.
Source: Ultimate Book of Accountancy

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Use of Securities Premium is restricted to as per the Section 52 (2) of the Companies
Act, 2013.

You are required to answer the following questions:

(i) How much amount is received by the company on application & allotment?

(ii) How much loss on issue of debentures is to be debited at the time of adjustment
of application money and allotment of Debentures?

(iii) How much amount is refunded by the company?

(iv) Give the entry for writing off loss on issue of Debentures.

(v) Prepare Loss on Issue of Debenture Account

Part – B Analysis of Financial Statements

27. Debentures become due for redemption within 12months within the period of operating cycle, are [1]
shown in the Balance Sheet under:

(a) Non-current Liabilities (b) Other Current Liabilities

(c) Short-term Borrowings (d) Contingent Liabilities

OR

Which of the following is correct: (Source: Ultimate Book of Accountancy CBSE class 12th)

(i) Interest coverage ratio is calculated under the Solvency Ratios.

(ii) Quick Ratio 1:1 is considered ideal ratio

(iii) Activity Ratios are also known as Performance or Turnover Ratio

The correct Statements are:

(a) Only (ii) is correct (b) Both (i) and (ii) are correct and (iii) is wrong

(c) All are incorrect (d) All are correct

28. Total Assets ……………………………………………. 27,00,000 [1]

Working Capital………………………………………….3,00,000

Non-current Assets ……………………………………22,00,000

Current Ratio of firm will be _______

(a) 2:1 (b) 1:1

(c) 1.5:1 (d) 2.5:1

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29. Vinod & Sons, a Non-financing company purchased copyrights of Rs. 2,50,000 and received interest [1]
on debentures of Rs. 40,000 from Kumar Ltd. also sold one old computer of book value Rs.30,000 at
a loss of 20%. (Source: Ultimate Book of Accountancy CBSE class 12th)

Cash inflow/outflow from investing activities will be _______

(a) Rs. 2,10,000 inflow (b) Rs. 2,10,000 outflow

(c) Rs.1,80,000 outflow (d) Rs.1,86,000 outflow

OR
Vinod Ltd. had opening balance of Non-current Investment Rs.60,000 and Balance at the end of the
year Rs.30,000. During the year, company sold half of the investment held in the beginning of the
year at a loss of Rs.10,000. (Source: Ultimate Book of Accountancy CBSE class 12th)

Cash Flow from Investing Activities will be ____________

(a) Rs.20,000 inflow (b) Rs.30,000 inflow

(c) Rs.60,000 inflow (d) Rs.40,000 inflow

30. Find out the Cash flow from Investing Activities: [1]
Particulars 31st March 2022 31st March 2021
Machinery 3,00,000 2,00,000

A machine costing Rs.40,000 (Depreciation provided thereon Rs.12,000) was sold for Rs.35,000.

Total Depreciation charged on machinery during the year Rs.60,000.

Inflow/outflow from investing activities will be ________

(a) Rs.1,88,000 inflow (b) Rs. 1,53,000 outflow

(c) Rs. 1,60,000 outflow (d) Rs. 1,73,000 outflow

31. Classify the following items under Major heads and sub-head (if any) in the Balance Sheet of a [3]
Company as per the Schedule III of the Companies Act 2013.

(i) License & Franchise

(ii) Accrued Commission

(iii) Marketable Securities

(iv) Building under construction

(v) Provision for doubtful debts

(vi) Calls in Advance

32. Give any three objectives of Financial Statement Analysis. [3]

33. (a) What is meant by Solvency Ratios? [4]

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(b) Current Assets of a business firm are Rs.17,00,000. Its Current Ratio is 2.50 and Liquid
Ratio is 0.95. Calculate Current Liabilities, Liquid Assets and Inventory.

OR
From the following information, compute Total Assets to Debt Ratio:
10% Debentures ………………………………………… 2,00,000
Bank Loan (Term Loan) ……………………………….1,00,000
Long-term Provisions …………………………………1,50,000
Trade Payables …………………………………………75,000
Non-Current Assets ………………………………….5,40,000
Trade Receivables ……………………………………1,35,000
34. From the following Extract of the Balance Sheet of Vinod Ltd., taking into consideration the additional [6]
information, you are required to calculate the amounts of the following items to be shown in the
company’s Cash Flow Statement for the year 2019-20: (Source: Ultimate Book of Accountancy class 12th)

(i) Fixed Assets Purchased

(ii) Fixed Assets Sold

(iii) Gain/Loss on sale of Fixed Assets

(iv) Depreciation charged on Fixed Assets

Particulars 31.3.2020 31.3.2019

Fixed Asset (Gross) 6,00,000 4,90,000

Additional Information:

(i) The provision for depreciation on fixed assets stood at Rs.1,40,000 on 31st March, 2019 and
Rs.1,80,000 on 31st March 2020.

(ii) During the year 2019-20, a fixed asset costing Rs.60,000 (book value Rs.30,000) was sold for
Rs.20,000

Answer Key --- Ultimate Sample Paper -1

1. (d)
Working Note: X’s Share = 5 = 100%
Y’s Share = 4 = 80% of X’s Share (i.e. 4/5 x 100 = 80%)
Thus Z’s Share = 80% of 4 = 3.2
New Share = 5 : 4 : 3.2 OR 25:20:16 rounded off

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2. (d)

3. (c) and answer of OR part is (d)

4. (c) and answer of OR part is (b)

5. (a)

6. (d) and answer of OR part is (a)

7. (c)

8. (a) and answer of OR part is (b)

9. (c)

10. (b)

11. (d)

12. (c)

13. (d)

14. (b) new ratio 9:6:5

15. (c)

16. (d)

17. Profit percentage = 2,00,000/10,00,000 x 100 = 20%

Estimated profit till death = 4,50,000 x 20/100 = 90,000
X’s share of profit = 90,000 x 1/3 = 30,000

Profit and Loss Suspense A/c Dr. 30,000

To X’s Capital A/c 30,000

18. Loss to be transferred to P/L Appropriation Account

= 40,000 profit – 60,000 Rent = 20,000 loss
Profit and Loss Appropriation A/c Dr. 20,000
To Profit and Loss A/c 20,000
(Being loss transferred)

X’s Capital A/c Dr. 10,000

Y’s Capital A/c Dr. 6,000
Z’s Capital A/c Dr. 4,000

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To Profit and Loss Appropriation A/c 20,000

X’s Capital A/c Dr. 8,000

Y’s Capital A/c Dr. 4,000
To Z’s Capital A/c 12,000
(Deficiency borne by X and Y 40,000 loss + 8,000 Guaranteed profit = 12,000 in 2:1)

Note: instead of using profit and loss appropriation account, students may prepare profit
and loss adjustment account.

OR
Y’s Capital A/c Dr. 735
To X’s Capital A/c 25
To Z’s Capital A/c 710

Adjustment Table
Particulars X Y Z
Interest on drawings not charged 1,750 1,800 ---
Profit 1,750 + 1,800 = 3,550 in 5:3:2 1,775 1,065 710
25 Cr. 735 Dr. 710 Cr.
19. Sundry Assets A/c Dr. 7,80,000
Goodwill A/c Dr. 1,20,000
To Sundry Liabilities 90,000
To Kyo Ltd. 8,10,000
(Being Assets and Liabilities taken over)

Kyo Ltd. Dr. 8,10,000

Discount on issue of Debentures Dr. 90,000
To 9% Debentures A/c 9,00,000
(8,10,000/90 = 9,000 Debentures issued)

Securities Premium A/c Dr. 50,000

Statement of Profit and Loss Dr. 40,000
To Discount on issue of Debentures 90,000

OR

Sundry Assets A/c Dr. 30,00,000

Goodwill A/c (Bal.) Dr. 7,37,000
To Sundry Liabilities 10,00,000
To GM Ltd. 27,37,000
(Being assets & liabilities taken over)

GM Ltd. Dr. 27,37,000

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To Bills Payable 51,000

To Equity Share Capital A/c 21,48,800
To Securities Premium A/c 5,37,200

20. Calculation of Sacrifice/Gain : X = 5/10 – 2/10 = 3/10 Sacrifice

Y = 3/10 – 3/10 = No Sacrifice/No Gain
Z = 2/10 – 5/10 = 3/10 Gain
Journal Entry :
Z’s Capital A/c Dr. 3,600
To X’s Capital A/c 3,600
(Being adjustment made at the time of change in ratio)
Note : Amount adjusted = 24,000 (P/L balance) Less Advertisement Suspense 12,000
24,000 – 12,000 = 12,000 × 3/10 = 3,600

21.
Balance Sheet.
Particulars Note No. Amount
I. Equity and Liabilities
1. Shareholders funds:
(a) Share Capital 1 4,97,500
(b) Reserve & Surplus 2 2,50,000

Notes to Accounts
1. Share Capital
Authorised Capital
1,00,000 equity shares of Rs.10 each 10,00,000
Issued Capital
50,000 equity shares of Rs.10 each 5,00,000
Subscribed/Called-up and Paid-up Capital
50,000 equity shares of Rs.10 each 5,00,000
Less : Calls in Arrear 2,500 4,97,500

2. Reserve & Surplus

Securities Premium 2,50,000

22. Journal

Date Particulars L.F Debit Credit

(i) Bank A/c Dr. 32,000
To Realisation A/c 32,000
(Being amount received from debtors after bad debts)

(ii) Realisation A/c Dr. 3,325

To George’s Capital A/c 3,325
(Being George pays his wife loan)

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(iii) Suraj’s Capital A/c Dr. 1,500

To Realisation A/c 1,500
(Being asset taken over by Suraj)

(iv) Realisation A/c Dr. 2,000

To Bank A/c 2,000
(Being Contingent liability discharged)

23. Journal Entries

(i) Bank A/c Dr. 12,00,000

To Sh. Application A/c 12,00,000
(Being application money received)

(ii) Share Application A/c Dr. 12,00,000

To Share Capital A/c 4,00,000
To Securities Premium A/c 2,00,000
To Share Allotment A/c 3,00,000
To Bank A/c 3,00,000
(iii) Share Allotment A/c Dr. 6,00,000
To Share Capital 4,00,000
To Securities Premium 2,00,000
(Being allotment money due)

(iv) Bank A/c Dr. 2,99,400

To Share Allotment A/c 2,99,400
(Being allotment money received)

(v) Share first & final call A/c Dr. 2,00,000

To Share Capital A/c 2,00,000
(Being call money due)

(vi) Bank A/c Dr. 1,99,400

To Share first & final call 1,99,400
(Being call money received)

(vii) Share Capital A/c Dr. 2,000

Securities Premium Dr. 400
To Share Allotment 600
To First & Final Call 400
To Sh. Forfeiture A/c 1,400
(Being 200 shares forfeited)

(viii) Share Capital A/c Dr. 1,000

To First & Final Call 200
To Sh. Forfeiture A/c 800
(Being 100 shares forfeited)

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(ix) Bank A/c Dr. 1,600

Sh. Forfeiture Dr. 400
To Share Capital A/c 2,000
(Being 200 shares of SK reissued)

(x) Bank A/c Dr. 800

Share Forfeiture Dr. 200
To Share Capital A/c 1,000
(Being 100 shares of VK reissued)

(xi) Share Forfeiture A/c Dr. 1,600

To Capital Reserve 1,600
(Being forfeiture account transferred to capital reserve)

Working Note: Shares applied by SK 300 but shares allotted 200

Shares applied by VK 150 but shares allotted 100

OR
Journal
Date Particulars L.F. Amount Dr. Amount Cr.
Share Capital A/c Dr. 7,050
Securities Premium A/c Dr. 1,410
To Shares Forfeiture A/c 2,350
To Shares Allotment A/c 3,760
To Share First Call A/c 2,350
(Being 470 shares forfeited)

Bank A/c Dr. 4,465

Share Forfeiture A/c Dr. 235
To Share Capital A/c 4,700
(Being 235 shares reissued)

Share Forfeiture A/c Dr. 940

To Capital Reserve 940
(Being gain on reissue of 235 shares transferred to
Capital Reserve)

24. Old Share = 5:2 and New Share = 2:3:3

A’s Sacrifice = 5/7 – 2/8 = 26/56
B’s Gain = 5/56
Journal Entries

Cash A/c Dr. 17,100

Stock A/c Dr. 8,000

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Furniture A/c Dr. 12,000

To C’s Capital A/c 35,000
To Premium for goodwill 2,100
(Being capital and premium brought by C)

Premium for goodwill Dr. 2,100

B’s Capital A/c (5,600 x 5/56) Dr. 500
To A’s Capital A/c 2,600
(Being premium for goodwill adjusted)

Revaluation Account
Particulars Amount Particulars Amount
To Bad Debts 1,000 By Bad debts recovered 550
To Provision for Bad Debts 550 By Investment (Profit) 2,400
To Profit transferred to:
A 1,000
B 400
2,950 2,950

Partners’ Capital Account

Particulars A B C Particulars A B C
To A’s Capital -- 500 -- By Balance b/d 50,000 40,000 --
To P/L A/c 5,000 2,000 -- By Premium 2,100 -- --
To Investment 4,000 4,000 -- By B’s Capital 500 -- --
To Bal. c/d 56,600 38,700 35,000 By Revaluation 1,000 400 --
By Workmen Reserve 2,000 800 --
By Gen. Reserve 10,000 4,000 --
By Cash 15,000
By Stock 8,000
By Furniture 12,000
65,600 45,200 35,000 65,600 45,200 35,000

Balance Sheet
Liabilities Amount Assets Amount
Capital Accounts: Plant and Machinery 30,000
A 56,600 Land and Building 30,000
B 38,700 Debtors 10,450
C 35,000 1,30,300 Stock 28,000
Creditors 21,000 Furniture 12,000
Workmen Compensation 2,200 Cash 11,000 + 2,100 + 15,000 +
14,400 + 550 43,050

1,53,500 1,53,500

OR

Revaluation Account
Particulars Amount Particulars Amount

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To Depreciation 3,600 + 400 4,000 By Provident fund 700

To Patents 1,000 By Investment 5,800
To Office Equipment 600
To Profit transferred to :
AK 450
BK 300
CK 150

6,500 6,500

Partners’ Capital Account

Particulars AK BK CK Particulars AK BK CK
To Investment -- -- 15,800 By Balance b/d 40,000 36,500 20,000
To CK’s Capital 2,700 1,800 -- By Gen. Reserve 4,500 3,000 1,500
To CK’s Loan -- -- 12,350 By AK’s Capital -- -- 2,700
To Bal. c/d 48,250 42,000 -- By BK’s Capital -- -- 1,800
By Revaluation 450 300 150
By P/L A/c 6,000 4,000 2,000
50,950 43,800 28,150 50,950 43,800 28,150
To BK’s Current 5,900 By Balance b/d 48,250 42,000
A/c 54,150 36,100 By AK’s Current A/c 5,900
To Bal. c/d
54,150 42,000 54,150 42,000

Total Capital of the firm = 48,250 + 42,000 = 90,250 in the ratio of 3 : 2

Balance Sheet
Liabilities Amount Assets Amount
Capitals: AK 54,150 Cash at Bank 4,100 + 2,400 6,500
BK 36,100 Debtors 30,000
CK’s Loan 12,350 Less : Provision 1,000 29,000
Provident Fund 2,300 Stock 25,000
Sundry Creditors 12,600 Office Equipment 9,000
BK’s Current A/c 5,900 Patents 4,000
Machinery 44,000
AK’s Current A/c 5,900
1,23,400 1,23,400

25. Sohan’s Capital Account

Particulars Amount Particulars Amount
To Sohan’s Executor’s A/c 1,26,000 By Balance b/d 75,000
By Revaluation A/c 5,000
By Ram’s Capital A/c (Goodwill) 21,875
By Mohan’s Capital A/c (Goodwill) 13,125
By Profit and Loss Suspense A/c 5,000
By General Reserve 6,000
1,26,000 1,26,000
Working Note: Sohan’s share of goodwill = 1,75,000 x 2/10 = 35,000
Ram = 35,000 x 5/8 = 21,875 and Mohan = 35,000 x 3/8 = 13,125

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26. (i) 21,00,000 (ii) 1,00,000 (iii) 10,50,000

(iv) Securities Premium A/c Dr. 85,000

Statement of Profit and Loss Dr. 15,000
To Loss on issue of Debentures A/c 1,00,000

(v) Loss on Issue of Debentures Account

Date Particulars Amount Date Particulars Amount

1 April To Premium on Redemption 31 By Securities Premium 85,000
2021 of Debentures A/c March By Statement of P/L 15,000
1,00,000 2022
1,00,000 1,00,000

Part B :- Analysis of Financial Statements (Option – I)

27. Ans. (c)

OR

Ans. (d) lllllllJlll ~

28. Ans. (d)

ÎÄR&ET@nt
29. Ans. (d)
Dr. Vinod Kumar
OR
Why chis a..lt. Unoquo& U....tt;
Ans. (a) ...........~o..-
•S..-
·--~ o-.
~

·--
.......... o,.¡,.
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. -. . . . .
11 --
. ...._
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D,D!lo4 ....... ""-1

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30. Ans. (b)

31. Ans.

Particulars Major Headings Sub-headings

(i) License & Franchise Non-current Assets Fixed Intangible Assets
(ii) Accrued Commission Current Assets Other Current Assets
(iii) Marketable Securities Current Assets Cash & Cash Equivalents
(iv) Building under construction Non-current Assets Capital work in progress
(v) Provision for doubtful debts Current Liabilities Short-term provision
(vi) Calls in Advance Current Liabilities Other Current Liabilities

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32. Ans. (any three)

(i) Assessing the earning capacity or profitability of the firm as a whole as well as its different
departments so as to judge the financial health of the firm.
(ii) Assessing the managerial efficiency by using financial ratios.
(iii) Assessing the short term and the long-term solvency of the enterprise.
(iv) Assessing their own performance as well as of others through inter firm comparison.
(v) Assessing developments in future by forecasting and preparing budgets.
(vi) Ascertain the relative importance of different components of the financial position of the firm.
(vii) Understanding complicated matter in a simplified manner.

33. Ans.

(a) Solvency Ratio defines the ability of a firm to meet its long term debts.
(b) Current Ratio = CA/CL = 17,00,000/CL = 2.5
Current Liabilities = 17,00,000/2.5 = 6,80,000
Liquid Ratio = Liquid Assets/Current Liabilities = Liquid Assets/6,80,000 = 0.95
Liquid Assets = 6,80,000 x 0.95 = 6,46,000
Inventory = CA – Liquid Assets = 17,00,000 – 6,46,000 = 10,54,000

OR

Ans.

Total Assets to Debt Ratio = Total Assets/Long-term Debt = 6,75,000/4,50,000 = 1.5:1

34. Ans.

(i) Fixed Assets Purchased Rs.1,70,000

(ii) Fixed Assets Sold Rs.20,000
(iii) Loss on sale of Fixed Assets Rs.10,000
(iv) Depreciation charged on Fixed Assets Rs.70,000
(v) Cash outflow/used in Investing Activities (Rs. 1,50,000)
Fixed Asset Account
Particulars Amount Particulars Amount
To Balance b/d 4,90,000 By Bank A/c 20,000
To Bank A/c 1,70,000 By Accumulated Dep. 30,000
(Bal. fig. purchase) By Loss on Sale 10,000
By Balance C/d 6,00,000
6,60,000 6,60,000

Accumulated Depreciation Account

Particulars Amount Particulars Amount
To Fixed Assets A/c 30,000 By Balance b/d 1,40,000
To Balance c/d 1,80,000 By Statement of P/L 70,000
2,10,000 2,10,000

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