CBSE Class 12 Accountancy Sample Paper 08 (2020-21) Maximum Marks: 80 Time Allowed: 3 hours General Instructions: i. This question paper comprises two Parts - A and B. There are 32 questions in the question paper. All questions are compulsory. ii, Part Ais compulsory for all candidates. iii, Part B has two options i.e. (1) Analysis of Financial Statements and (2) Computerized Accounting. You have to attempt only one of the given options. tv. Question nos, 1 to 13 and 23 to 29 are very short answer type questions carrying 1 mark each. v. Question nos. 14 and 30 are short answer type-I questions carrying 3 marks each. vi Question nos, 15 to 18 and 31 are short answer type-II questions carrying 4 marks each. vii, Question nos. 19, 20 and 32 are long answer type-I questions carrying 6 marks each. viii. Question nos. 21 and 22 are long answer type-II questions carrying 8 marks each. ix. There is no overall choice. However, an internal choice has been provided in 2 questions of three marks, 2 questions of four marks and 2 questions of eight marks Section A 1. The persons who have entered into a partnership business with one another are individually called a. Co-operatives b. Firm c. Company d. Partner The amount of goodwill brought in by the new partner is shared by the in their ratio. partners a. Gaining partner, gaining b. All partners (including new) in new ratioc. Sacrificing partners, sacrificing d. Allold partmersin old ratio shares are issued by a company at discount to its employees or directors for their hard work and dedication towards the company. a. Bonus Shares b. Preference Shares c. Employees Stock Option Scheme d. Sweat Equity Shares Expenditure on the construction of the Pavilion is Rs.6,00,000. The construction work is in progress and has not yet completed. Pavilion fund as at 31st March 2011 is Rs.10,00,000 and Capital fund as at 31st March 2011 is Rs.20,00,000. Calculate the amount to be shown on the liability side as Pavilion fund a. Rs.4,00,000 b. Rs.2,00,000 c. Rs.40,00,000 d. Rs.6,00,000 . First pay and then pay is the basic rule a. Firm’s Debt, Private debt b. Capital A/es, Current A/es ¢. to the partners, to the outsiders d. Private debts, Partners . Which of the following statement is incorrect? a, Sweat Equity shares can be issued at a discount b. Shares can be issued at discount c. The company can issue shares other than cash d. There is no limit for securities premium . Unrecorded Asset taken over by the partner will not be shown in: a. None of these b. Partners Capital Ale ©. Realisation A/c d. Cash A/c on the reconstitution of partnership is necessary because their present value may be different from their book value.10. 1. 12. a. Reassessment of assets b. Assessment of assets c. Revaluation of assets d. Valuation of assets Fill in the blanks: In case of retirement of a partner, profit or loss on revaluation of assets and re- assessment of liabilities is distributed among parmers in ratio. If Preliminary expenses are given on the Asset side of the Balance sheet. What treatment will be done? a. Debited to all partners in equal ratio b. Debited to old partners in gaining ratio c. Debited to all partners capital A/c in the old ratio d. Credited to all partners capital account During the death of partner many items are calculated can be calculated on the basis of time and sales. a. Goodwill of the firm b. Deceased partner’s share of profit c. Revaluation Profit d. Amount paid to the executor of the deceased partner. A firm earned net profits during the last three years as: 2008-09 Rs.36,000 2009-10 Rs.40,000 2010-11 Rs.44,000 The capital investment of the firm is Rs.1,20,000. A fair return on the capital having regard to the risk involved is 10%. Calculate the value of goodwill on the basis of three year’s purchase of the super profit for the last three year. a. Rs.92000 b. Rs. 70000 c. Rs.65000. d. Rs. 8400013. For transfer of Profit from Profit and Loss Appropriation account to Reserve account, which account to he credited a. Reserve A/c b. Profit and Loss Appropriation account c. Profit and Loss Adjustment Account d. Profit and Loss account 14. The Receipt and Payment Account of Kelvin Sports Club showed that Rs. 63,000 were received by way of subscriptions for the year ended on March 31, 2018. The additional information was as under: i. Subscription Outstanding as on March 31, 2017, was Rs. 6,500 ii, Subscription received in advance as of March 31, 2017, was Rs. 4,100 iii, Subscription Outstanding as on March 31, 2018, was Rs. 5,400 iv. Subscription received in advance as of March 31, 2018, was Rs. 2,500 Show how that above information would appear in the final accounts for the year ended on March 31, 2018, of Kelvin Sports Club. oR Calculate the amount of stationery to be posted to Income and Expenditure Account of Indian Cultural Society for the year ending 31°t March 2018 from the following information : Particulars 1.4.2017 (Rs.) 31.3.2018 (RS.) Stock of stationery 21,000 18,000 Creditors for stationery 11,000 23,000 Stationery purchased during the year ended 31 March 2018 was Rs.75,000. Also, present the relevant items in the Balance Sheet of the society as at 315t March 2018. 15, Aand B are partners sharing profits and losses in the ratio of 3 : 2. Their capital on 31st March 2018 after all adjustments stood at ¥1,65,500 and 31,27,600 respectively. Profits amounting to 50,000 for the year 2017-18 were distributed after allowing interest on drawings @ 12% p.a. During the year A withdrew 315,000 at the beginning of every16. 17. quarter and B withdrew %40,000 during the year. The partnership deed is silent on interest on drawings but pravides for interest on capital @ 5% p.a. Interest on Capital has not been provided. Showing your workings clearly, pass the necessary adjustment entry to rectify the above errors. OR The capital accounts of Alka and Archana showed credit balances of %4,00,000 and 33,00,000 respectively, after taking into account drawings and net profit of %2,00,000. The drawings of the partners during the year 2018-19 were: i. Alka withdrew 310,000 at the end of each quarter. ii, Archana’s drawings were: z 31°t May 2018 8,000 18' November 2018 7,000 1®' February 2019 5,000 Calculate interest on partners’ capitals @ 10% p.a. and interest on partners’ drawings @ 6% p.a. for the year ended 31st March 2019. Give journal entries to record the following transaction of forfeiture and reissue of shares and open share forfeiture account. L Ltd forfeited 470 equity shares of Rs. 10 each issued at a premium of Rs. 5 per share for non-payment of allotment money Rs. 8 per share (including share premium Rs. 5 per share) and the first and final call of Rs. 5 per share. Out of these, 60 equity shares were subsequently reissued @ Rs.14 per shares. Aand B share profits and losses in the ration of 5:2. They have decided to dissolve the firm. Assets and external liabilities have been transferred to Realisation A/c. Pass the Journal Entries to affect the following: a. Bank Loan of Rs. 12,000 is paid off. b. Awas to bear all expenses of Realisation for which he is given to the commission of18. 19. Rs. 400. ¢. Deferred Advertisement Expenditure A/c appeared in the hook at Rs. 28,000 d. Stock worth Rs. 1,600 was taken over by B at Rs. 1,200. e. As unrecorded Computer realized Rs. 7,000. f. There was an outstanding bill for repairs for Rs. 2,000. Which was paid off. Under each of the following capital accounts of partners a firm, list which items may be debited or credited: i. Capitals are fixed. ii, Capitals are fluctuating. Following is the receipts and payments account of the Indian Youth Association for the year ended 31st December 2013 Receipts and Payments Account for the year ended 31st December 2013 Receipts a Payments ae (Rs.) Rs.) To Balance b/d By Salaries 90,000 Cash in hand 7,500 By Rent 18,000 Cash at Bank 73,500 81,000 By Printing and stationery 4,500 To Subscriptions 1,20,000 | By Postage 1,200 To Bank interest 600 _| By Typewriter purchased 12,000 To Sale of old car 12,000 _| By Investments 24,000 By Balance c/a Cash in hand 3,900 Cash at bank 60,000 63,900 2,13,600 2,13,600 Investments were purchased on 1st July 2013 and yielded interest @ 5% per annum subscriptions included Rs. 24,000 for 2012 and Rs. 12,000 for 2014. Subscriptions for 2013 still in arrear were Rs. 24,000. Rent for December 2013 Rs. 500 is still unpaid. Rs. 900 arepayable against a bill for stationery. The book value of the car was Rs. 16.500. Prepare the income and expenditure account for the year ended 31st December 2013 and the balance sheet as at that date. 20. Hyatt Ltd. took a loan of %8,00,000 from State Bank of India and issued 10,000; 9% Debentures of 3100 each as collateral security. How will the issue of debentures be shown in the Balance Sheet: 1. When Journal entry is not passed; and i, When Journal entry is passed? 21. The Balance Sheet of Wrong and Right who shared profits and losses in the ratio of 3:2 was as follows on January. 01, 2016. Balance Sheet of W and R as on Jan. 01, 2016 Amount Amount Liabilities Assets (Rs) (Rs) Sundry 20,000 Cash in hand 5,000 Creditors Partner's Sundry Debtors 20,000 Capital Less: Provision for doubtful Wrong 40,000 700 | 19,300 debts Right 30,000 | 70,000 Stock 25,000 Plant and Machinery 35,000 Patents 5,700 90,000 90,000 On this date Bright was admitted as a partner on the following conditions: i. He was to get 4 share of profit. ii, He had to bring in Rs 30,000 as his capital. He would bring cash for goodwill which would be based on 2} years purchase of theprofits of the past four years, iv. Wrong and Right would withdraw half the amount of goodwill premium brought by Bright. v. The assets would be revalued as: Sundry Debtors at book value less a provision of 5%; Stock at Rs 20,000; Plant and Machinery at Rs 40,000; and Patents at Rs 12,000. vi Liabilities were valued at Rs 23,000, one bill for goods purchased having been omitted from books. vii. Profit for the past four years were: 2012 = 15,000 2013 = 20,000 2014 = 14,000 2015 = 17,000 Pass necessary journal entries and prepare ledger accounts to record the above.Also prepare the Balance Sheet after Bright’s admission. OR And B are parmers sharing profits in equal proportion. Following is the Balance Sheet as at 31st March, 2021 Balance Sheet Liabilities Rs. Assets RS. Creditors 40,000 Cash 2,000 BP 14,000 Bank 10,000 Capitals: Debtors 42,000 A 50,000. Less: Provision 4,000 38,000 B 45,000 95,000 BR 17,000 Stock 20,000 Investments 20,000 Furniture 5,000 Building 37,00022. | | 1.49.00 C admitted as a partner and contribute 30,000 as capital. It was decided that the provision raised to Rs. 6,500. Building and furniture be valued at Rs. 45,000 and Rs. 4,500 respectively. Personal investments of A Rs. 4,300 be treated as firm's investments. A claim of Rs. 1,200 by an employee has been admitted. Prepare Revaluation Account, Capital Account and Balance Sheet after admission. Radha Mohan Ltd. invited applications for issuing 4,00,000 equity shares of Rs. 50 each. The amount was payable as follows On application - Rs. 15 per share On allotment- Rs. 25 per share On first and final call -Rs. 10 per share Applications for 6,00,000 shares were received and pro-rata allotment was made to all the applicants on the following basis Applicants for 4,00,000 shares were allotted 3,00,000 shares. Applicants for 2,00,000 shares were allotted 1,00,000 shares. It was decided that excess amount received on applications will be adjusted towards sums due on allotment and surplus if any, will be refunded. Vibhuti, who was alloted 6,000 shares out of the group applying for 4,00,000 shares did not pay the allotment money and his shares were forfeited immediately. Afterwards, these forfeited shares were reissued at Rs. 30 per share fully paid up. Later on, first and final call was made. Shahid, who had applied for 2,000 shares out of the group applying for 2,00,000 shares failed to pay first and final call and his shares were also forfeited. These shares were afterwards reissued at Rs. 60 per share fully paid up. Pass necessary journal entries in the books of Radha Mohan Ltd for the above transactions. OR X Ltd issued 40,000 equity shares of Rs. 10 each at a premium of Rs. 2.50 per share. The amount was payable as follows On application — Rs. 2 per share On allotment — Rs. 4.50 per share (including premium) and on-call — Balance t 6 per share23. 24. 26. 27. Owing to heavy subscription the allotment was made on a pro-rata basis as follows i Applications for 20,000 shares were allotted 10,000 shares. ii, Applications for 56,000 shares were allotted 14,000 shares. iii. Applications for 48,000 shares were allotted 16,000 shares. It was decided that the excess amount received on applications would be utilised on the allotment and the surplus would be refunded. Ram, to whom 1,000 shares were allotted, who helongs to category (i), failed to pay allotment money. His shares were forfeited after the call. Pass necessary journal entries in the books of X Ltd for the above transactions. Section B Rent Received is classified under: Investing Activities Financing Activities Cash and Cash Equivalents Operating Activities What does ‘Proprietary Ratio’ indicate? Bp Sp How a Company's balance sheet is different from the balance sheet of the partnership firm? a. A company’s Balance Sheet format is fixed under schedule III. Whereas, there is no standard form prescribed under the Indian Partnership Act,1932 for a partnership Firm’s balance sheet. b. Incase ofa company’s Balance sheet, the previous year's figures are required to be given whereas it is not so in the case of a partnership firm’s balance sheet. c. Not different d. For the company’s Balance Sheet and partnership balance sheet format is fixed under schedule III. Which of the following is concerned with financing activities? a. Income tax paid b. Interest paid on long term loans c. Rent Received d. Sale of investment Fill in the blanks:28. 29. 30. Securities Premium Reserve is shown on the Equity and Liabilities part of the Balance Sheet under the head and XYZ Company's total current assets are 710,000,000 and its total current liabilities are %8,000,000 then its current ratio would he a. 2:1 b. 1.25:1 c 1:50 d. 1:2 Ideal Liquid ratio is a2:1 b. 1:1 oe 122 a. 3:1 Working Capital Rs. 36,000; Current Ratio 2.8:1; Inventory Rs. 16,000. Calculate Current Assets, Current Liabilities and Quick Ratio. OR From the following information calculate Proprietary Ratio and Total Assets to Debt Ratio Balance Sheet of ABC Ltd. Asat Particulars Note No. | Figure for Current Years (Rs.) 1. EQUITY AND LIABILITIES (1) Shareholders’ funds (a) Share capital 4,50,000 (b) Reserves and surplus 1,80,000 (2) Non-current Liabilities (a)Long-term borrowings 75,000 (3) Current liabilities (a)Trade payables 45,00031. Total 7,50,000 IL. ASSETS ()Non-current assets (a)Fixed assets 2,25,000 (b)Non-current invesuments 1,50,000 (2)Current Assets (a)Inventories Total 7,50,000 ‘ Prepare the Common size Balance Sheet and comment on the financial position of K Ltd. and L Ltd. The Balance Sheets of K Ltd. and L Ltd. as at 31.3.2012 are given below: Note Particulars KLtd LLtd. No. Figures asat | Figures as at | Figuresasat | Figuresasat the end of the | the end ofthe | the end of the | the end of the current previous current previous reporting reporting reporting reporting period period period period 1. EQUITY AND LIABILITIES Shareholder's Funds Share 3,00,000 4,00,000 Capital: Issued and 2,00,000 3,00,000 paid-up Reserves and SurplusCurrent liabilities Short-term 1,00,000 50,000 Borrowings: 6,00,000 7,50,000 IL ASSETS Non - Current Assets Fixed Assets 4,00,000 4,00,000 Current 2,00,000 3,50,000 Assets 6,00,000 7,50,000 OR Prepare a comparative statement of profit and loss from the following information extracted from the statement of profit and loss of Fun Sports Ltd for the year ended 3ist March 2015. Particulars ‘31st March 2015 Amt (Rs.) | 31st March 2014 Amt (Rs.) Revenue from Operations _| 70,00,000 50,00,000 Employee Benefit Expenses | 35,00,000 20,00,000 Depreciation 8,00,000 5,00,000 Other Expenses 16.,00,000 12,00,000 Tax Rate 40% 40% 32. From the following Balance Sheets of B.C.R. Ltd. as at 31st March 2013 and 31st March 2012, prepare Cash Flow Statement : Balance Sheets of B.C.R. Ltd. as at 31st March 2013 and 31st March 201231st March | 31st March Particulars 2007 2006 Bs.) (Rs.) 1. EQUITY AND LIABILITIES 1. Shareholders Funds (a) Share Capital 7,00,000 500,000 (b) Reserves and Surplus: Surplusi.e, Balance in Statement | 4 = oq sodia0n of Profit and Loss 2. Non - Current Liabilities Bank Loan 3,50,000 2,00,000 3. Current Liabilities (a) Trade Payables(Creditors) 52,000 55,000 (®) Short- term Provisions 1,20,000 80,000 12,72,000 | 9,35,000 Il. ASSETS 1. Non - Current Assets (a) Fixed Assets (i) Tangible : Equipment 5,00,000 | 50,00,000 (ii) Intangible Assets 95,000 1,00,000 (0) Non - Current Investments 1,00,000 - 2. Current Assets (a) Trade Receivables 1,47,000 80,000 (b) Inventories(Stock) 1,30,000 55,000 (b) Cash and Cash Equivalents : Bank 3,00,000 2,00,000 12,72,000 | 9,35,000Note to Accounts: . 31st March 2013 31st March 2012 Particulars (Rs.) (Rs.) 1. Short-term Provisions Proposed Dividend 70,000 50,000 Provision for Tax 50,000 30,000 1,20,000 80,000 Additional Information : During the year Equipment costing Rs. 1,00,000 was purchased. Loss on sale of Equipment amounted to Rs. 12,000, Rs. 18,000 depreciation was charged on Equipment. Note: Balance Sheets given in the question paper have heen modified as per Schedule III of Companies Act, 2013.CBSE Class 12 Accountancy Sample Paper 08 (2020-21) Solution Section A . (@) Partner Explanation: A person who joins a partnership business individually called a partner. The group of partners is called Firm and the name under which all business activities going on is known as the firm’s name. Partners are agreed to share profit or loss of the firm. . (c) Sacrificing partners, sacrificing Explanation: The amount of premium for goodwill brought in by the new partner will be shared only by the sacrificing partners in their sacrificing ratio. Sacrificing ratio = Old Ratio - New ratio. . (d) Sweat Equity Shares Explanation: Sweat equity shares” are such equity shares, which are issued by a company to its directors or employees at a discount for providing their know-how or making available rights in the nature of intellectual property rights or value additions, by whatever name called. . (a) Rs.4,00,000 Explanation: Pavilion fund is a specific fund which is for construction for pavilion hence it isa liability. Any expenditure to construct will be deducted from this fund. So, Expenditure on construction is deducted from the pavilion fund and added to the capital fund and it is also shown on assets side as work in progress (WIP). Amount to be shown on the liability side of the balance sheet of Non-profit organisation as Pavilion fund = Balance in pavilion fund - Expenditure on the construction of the pavilion Amount to be shown on liability side of balance sheet as pavilion fund = 10,00,000 - 6,00,0000= Rs. 4,00,000 . (a) Firm’s Debt, Private debt Explanation: This is the basic rule of any business firm is that business has to pay first to the outsiders (Creditors/firm’s debts, bank or lenders etc.) and then pay to the partners1. 12. 13. and other personal payments of partners (if any). (b) Shares can be issued at a discount Explanation: A company cannot issue its shares at discount. It can only issue shares at par and premium. Companies Act prohibits to issue shares at discount. (a) Cash Alc Explanation: If the unrecorded asset is taken over by a partner, it will take place in realization account as well as in concerned partner's capital account but not in cash account because partner's Capital A/c will be debited and Realisation A/c will be credited. (c) Revaluation of assets Explanation: At the time of reconstitution of partnership firm, it is necessary to prepare revaluation account or revalue the assets and re-assess the liabilities. The present value of the assets will be different from the previous book value of assets. This is known Revaluation of Assets. old . (c) Debited to all partners capital A/c in the old ratio Explanation: At the time of retirement or death ofa partner, while adjusting the capital accounts, preliminary expenses given in the balance sheet should be debited to all the partners in their old profit sharing ratio. Preliminary expenses are deferred expenditures which are to be written off between all partners. (b) Deceased partner’s share of profit Explanation: Deceased partner's share of profit can be calculated on the basis of the time and sales. His share of profit will be transferred to his capital account in the name of Profit and Loss Suspense account in case of no change in profit sharing ratio and if there is a change in profit sharing ratio then gaining partner is debited and sacrificing partner is credited. (a) Rs. 84000 Explanation: Calculation of Goodwill by Super Profit Method: 1. Average profit = 36,000 + 40,000 + 44,000 = 1,20,000/3 = 40,000 2. Normal Profit = 1,20,000 x 10/100 = 12,000 3. Super Profit = 40,000 — 12,000 = 28,000 4. Goodwill = 28,000 x 3 = 84,000 (a) Reserve A/cExplanation: Reserve account should be credited at the time of the creation of a reserve when it is created out of the profit available for appropriations. Reserve is to be shown in the debit side of profit and loss appropriation account and in the liabilities side of the balance sheet. Journal for Reserve: Profit and Loss Appropriation A/c To Reserve Alc Dr Books of Kelvin Sports Club Income and Expenditure Account for the year ending on March 31, 2018 Dr. Cr. Expenditure | Amount (Rs) Income Amount (Rs) By Subscription: 63,000 Less: O/s on Mar. 31, 2016 (6,500) Add: Advance on Mar. 31, 2016 | 4,100 Add: O/s on Mar. 31, 2017 5,400 Less: Advance on Mar. 31, 2017 | (2,500) | 63,500 Balance Sheet as of March 31, 2017 Liabilities Amount (Rs) Assets Amount (Rs) Subscription in Advance | 4,100 Subscription Outstanding | 6,500 Balance Sheet as of March 31, 2018 Liabilities Amount (Rs) Assets Amount (Rs) Subscription in Advance | 2,500 Subscription Outstanding | 5,400 OR15. Stationery Account Dr. Cr. Particulars Rs. Particulars Rs. To Balance b/d 21,000 By Income & Expenditure A/c 78,000 To Bank 75,000 (Balancing figure) By Balance c/d 18,000 96,000 96,000 Balance sheet as on 31.03.2018 Liabilities Rs. Assets Rs. Creditors for stationery 23,000 _| Stationery's Stock 18,000 JOURNAL Date | Particulars LF. Dr. (%) | Cr. (%) A’s Capital A/e Dr. 140 To B's Capital A/c 140 (Omission of interest on capital, now rectified) Working Notes: Table showing adjustments Net Effect Interest on capital Interest on drawings Profits Dr. Partners Dr. Cr. Cr. Cr. (®) ®) * . @® &® A 10,000 4,500 14,640 | 140 - 7,500 2,400 9,760 - 140 17,500 6,900 24,400 140 140Calculation of Interest on capital:- A®) BQ) Closing Capitals 1,65,500 1,27,600 Add: Drawings 60,000 40,000 Add: Interest on drawings 4,500 2,400 Less: Profits 30,000 20,000 Opening Capitals -2,00,000 150,000 Interest on Capital@5% p.a. 10,000 7,500 a * 700 ‘ ete OR Calculation of Interest on capital: Calculation of Opening Capitals: Particulars Alka (%) Archana (%) Closing Capitals 4,00,000 3,00,000 Add Drawings 40,000 20,000 Less Profits 1,00,000 1,00,000 Opening Capitals - 3,40,000 2,20,000 Interest on Capital@10% p.a. 34,000 22,000 Alkxa’s Interest on Drawings = 36 x 40,000 x $5 = 900 When drawings are taken at end of each quarter then 4.5 months are taken. Archana’s Interest on Drawings Date @® No. of months @®) 31.05.18 8,000 10 80,00016. 01.11.18 7,000 5 35,000 01.02.19 5,000 z 10,000 1,25,000 = 6 5 th Interest on Drawings = yyy X %1,25,000 x qq = 7625 Alternatively, Interest on drawings can be calculated as: 6 6 10 5 (%8,000 x soy X Gq) + 7,000 Fg X Gq) + 5,000 x 6 00 JOURNAL Bis X gg) = 3625 Date | Particulars = @r.) | (Cr.) Equity Share Capital A/c (470 x 10) 4,700 Securities Premium Reserve Ajc (470 X 5) 2,350 To Share Forfeiture A/c (470 x 2) 940 To Equity Share Allotment A/c (470 x 8) 3,760 To Equity Share First and Final Call A/c (470 x 5) 2,350 (Being 470 shares forfeited for the non-payment of allotment and first and final call) Bank Ajc (60 X 14) To Equity Share Capital A/c (60 x 10) 840 600 To Securities Premium Reserve A/c (60 x 4) 240 (Being reissue of 60 shares @ Rs. 14 per share as fully paid-up) Share Forfeiture A/c Dr. 120 To Capital Reserve A/c 120 (Being balance of forfeited share account transferred to capital reserve)17. SHARE FORFEITURE ACCOUNT Working Notes : 1. Calculation of Capital Reserve : Forfeiture Amount of 60 forfeited shares = 940 x Rs.120 a0 Particulars Amt(Rs.) | Particulars Amt (Rs.) To Capital Reserve A/c 120 By Share Capital A/c | 940 To Balance c/d (Balancing figure) | 820 940 940 When reissue is done at a premium, the full amount is transferred to Capital Reserve Account. So, here a full amount of Rs. 120 will be transferred to Capital Reserve Account. 2. Since the amount of Premium has not been received on forfeited shares, Securities Premium Account has been debited. Journal Date Particulars L.F.| (Rs) | (Rs.) (a) Realisation A/c Dr. | 12,000) ...... To Bank A/c 12,000 (Being bank loan discharged) (b) Realisation A/c Dr. | 400 To A’s Capital A/c ‘400 (Being commission to A credited to A's Capital Account) (© | A’s Capital A/c Dr. | 20,000) ... B's Capital A/c Dr. | 8,000 To Deferred Advertisement Expenditure A/c (Being the deleted advertisement expenditure written off bante by debiting Partner's Capital Account in Ratio 5:2, i.e. Profit , Sharing Ratio)(a) B's Capital A/c Dr. 1,200 To Realisation A/c (Being Stock taken over by B at Rs. 1,200 at agreed value) 1,200 (e) Bank A/c To Realisation A/c (Being unrecorded computer sold for Rs. 7,000) Dr. 7,000 7,000 oO Realisation A/c Dr. 2,000 To Bank A/c (Being outstanding bill paid for repairs) 2,000 18. Capital account of the partner is prepared under the two methods: (i) Fixed capital 19. method and (ii) Fluctuating capital method. i. Under the fixed capital account there will be two accounts for each partner namely the partners’ capital account and partner's current account. Under Capital account only when fresh capital introduced is credited or debited when capital is withdrawn. When there is no addition or withdrawal during a year, capital remains as it is. Under current accounts record transactions related to drawings, interest on drawings or debit balance of capital is debited and restal i.e. interest on capital, commission, salary, profit and loss share are credited etc. ii, Under Fluctuating capital account: Only one capital account is prepared during the year. There is no current account prepared or maintained under this method. All the transactions related to the drawings, interest on drawings, debit balance of profit and loss, drawings are debited and interest on capital, commission, salary, and profit and loss cr balance share, additional capital introduced are credited. Income and Expenditure Account for the year ended December 31 5 Amount Amount Expenditure Income (Rs) (Rs) To Salaries 90,000 | By Subscription 1,20,000 To Rent 18,000 Add O/S Current year 24,000Add Outstanding 500 18,500 | Less O/S Last year 24,000 To Printing & stationary 4,500 Less Advance Next year 12,000 | 1,08,000 Add Outstanding 900 5,400 | By bank Interest 600 To Postage 1,200 | To Ojs Interest on investment 600 To Loss on sale of the car 4,500 | By Deficit (Bal Fig) 10,400 1,19,600 1,19,600 Balance Sheet As on Jan 1, 2013 Amount Amount Liabilities Assets (Rs) (Rs) Capital Fund (Bal. Fig.) 1,21,500 Cash 7,500 Bank 73,500 Car 16,500 Subscription o/s 24,000 1,21,500 1,21,500 Balance Sheet As on Dec 31, 2013 Amount Amount Liabilities Assets (Rs) (Rs) Capital Fund 1,21,500 Cash 3,900 Less Deficit 10,400 1,11,100 | Bank 60,000 Advance Subscription 12,000 | Investment 24,000 Outstanding Rent 500 | Add Outstanding 600 24,600Outstanding Stationery 900 | Typewriter 12,000 Outstanding Subscription 24,000 1,24,500 1,24,500 The Income and Expenditure Account is a summary of all items of incomes and expenses which relate to the ongoing accounting year. It is prepared with the objective of finding out the surplus or deficit arising out of current incomes over current expenses. 20. i. First Method (When Journal Entry is not passed): An EXTRACT OF BALANCE SHEET OF HYATT LTD. asat.... Particulars Note No. z I. EQUITY AND LIABILITIES Non-Current Liabilities Long-term Borrowings 1 8,00,000 Note to Accounts 1. Long-term Borrowings z Loan from State Bank of India (Secured by issue of 10,000; 9% Debentures of 7100 each as Collateral 8,00,000 Security) ii, Second Method (When Journal Entry is Passed): JOURNAL Date Particulars LE} Dr@ | ¢r.@) Debentures Suspense A/c Dr. 10,00,000 To 9% Debentures A/c 10,00,000 (Being the issue of 10,000; 9% Debentures of %100 each as collateral security for aloantaken from State Bank of India) L [| AN EXTRACT OF BALANCE SHEET of HYATT LTD. as at... Particulars Note No. I. EQUITY AND LIABILITIES Non-Current Liabilities Long-term Borrowings 1 8,00,000 Note to Accounts 1. Long-term Borrowings z Loan from State Bank of India 8,00,000 10,000; 9% Debentures of $100 each issued as Collateral Security 10,00,000 Less: Debentures Suspense A/c 10,00,000 8,00,000 21. The goodwill of the firm is Rs 41,250 worked out as under: Profits: Year 2012 = 15,000 Year 2013 = 20,000 Year 2014= 14,000 Year 2015 = 17,000 Total profit = 66,000 Average profit = Rs “9 - gs 16,500 Goodwill at 24 Years purchase = Rs. 16,500 x £ =Rs. 41.250 Bright's share of goodwill = Rs. 41,250 x 4/15 =Rs, 11,000. Books of Wrong, Right and Bright JournalDate Particulars LF.| Credit] Debit 2016 (Rs) | (Rs) Cash A/c Dr. 41,000 To Bright's Capital A/c 30,000 To premium for Goodwill Alc 11,000 (Sum brought in by Bright as his Capital and his share (4) of the goodwill) Premium for Goodwill A/c Dr. 11,000 ‘To Wrong’s Capital A/c 6,600 To Right's Capital A/c 4,400 (Goodwill brought by Bright credited to Wrong’s and Right's capital accounts in old profit ratio of 3:2) Wrong’s Capital A/c Dr. 3,300 Right's Capital A/c 2,200 To Cash Ale 5,500 (half of goodwill withdrawn by the old partners) Revaluation A/c Dr. 5,300 Jan. To Provision for Doubtful Debts A/c 300 01 To Stock A/e 5,000 (Increase in provision for doubtful debts to Rs 1,000 (5% of Rs 20,000) and decrease in value of stock) Plant and Machinery A/c Dr. 5,000 Patents Ae Dr. 6,300 To Revaluation A/c 11,300 crease in value of Plant and Machinery and Patents)Revaluation A/c pr| — {3,000 To Sundry Creditors A/c 3,000 (ncrease in liabilities) Revaluation A/c Dr. 3,000 To Wrong’s Capital 1,800 To Right's Capital A/c 41,200 (Being profit on adjustment transferred to partners’ capital accounts) Cash Account Dr. , Date Amount Date Amount Particulars | J.F. Particulars | J.P. 2016 @s) | 2016 (Rs) By Wrong’s To Balance b/d 5,000 " 3,300 Capital A/C To Bright’: By Right’s Capital wat |p ae 30,000 | jan. 1 y Rights Capi 2,200 - 1 | Capital A/C ‘1 | alc To Goodwill A/C 11,000 By Balance c/d 40,500 46,000 46,000 Bright's Capital Account Dr. Cr. Date - Amount Date Amount Particulars | J.P. Particulars| J.F. 2016 (Rs) 2016 (Rs) To Balance jan | 30,000 Jan.1 | By Cash A/C 30,000 30,000 30,000Wrong's Capital Account Dr. cr. Date Amount Date Amount Particulars | J.F. Particulars jE. 2016 (Rs) | 2016 (Rs) To Cash A/C 3,300 By Balance b/d 40,000 To Balance By premium for 45,100 6,600 Jani | eld Jan.1 | Goodwill A/C By Revaluation A/C 1,800 48,400 48,400 Right's Capital Account pr. Cr Date Amount Date Amount Particulars J.F. Particulars JF. 2016 (Rs) | 2016 (Rs) To Cash A/C | 2,200 By Balance b/d 30,000 To Balance By premium for 33,400 , 4,400 Jan.1 | eld Jan. 1 | Goodwill A/C By Revaluation A/C 1,200 35,600 35,600 Revaluation Account Dr. cr. Amount Amount Particulars Particulars (Rs) (Rs) To Provision for doubtful debts By Plant and Machinery 300 5,000 AIC AIC To Stock A/C 3,000 By Patents A/C 6,300To Sundry Creditors A/C 3,000 To Profit transferred to: Wrong: 1,800 Right: 2 1,200 3,000 11,300 11,300 Balance Sheet of Wrong, Right and Bright as on January 01, 2016 Amount Amount Liabilities Assets (Rs) (Rs) Sundry . 23,000 Cash in hand 40,500 Creditors Capital Sundry Debtors 20,000 Less: Provision for doubtful Wrong | 45,100 1,000 | 19,000 debts Right | 33,400 Stock 20,000 Bright | 30,000 | 1,08,500 Plant and Machinery 40,000 Patents 12,000 1,31,500 1,31,500 The new profit sharing ratio will be: Wrong=(1-4)x $-2 x 3-8 Rignt-(Q-4)x 2-H x 2-2 Bright= 4 = 22 The new ratio is 33: 22 : 20 OR Revaluation AccountParticulars Rs. Particulars Rs. To Provision 2500 By Building 8000 To Furniture 500 To Claim to Employee 1200 To Profit Transfer: A 1900 B 1900 8000 8000 Partner's Capital Accounts Particulars A B co Particulars A B c To Balance ¢/d 56200 | 46900 | 30000 | By Balance b/d 50000 | 45000 ByRevaluation 1900 | 1900 ByInvestments | 4300 By Bank 30000 56200 | 46900 56200 | 46900 | 30000 Balance Sheet (after admission) Liabilities Rs. Assets Creditors 40000 | Cash 2000 B/P 14000 Bank 40000 Claim to Employee 1200 ‘| Debtors 42000 Capitals: Less: Provision 6500 35500, A 56200 BR 17000 B 46900 Stock 200002: c 30000 | 133100 | Investments 24300 Furniture 4500 Building 45000 188300 188300 JOURNAL Date Particulars L.E| Amt (Dr) | Amt (Cr) i | Bank A/c (6,00,000 x 15) Dr 90,00,000 To Equity Share Application A/c 90,00,000 (eing application money received on 6,00,000 equity shares @ Rs. 15 each) Equity Share Application Ajc (6,00,000 x 15) Dr. 90,00,000 To Equity Share Capital A/c (4,00,000 x 15) 60,00,000 To Equity Share Allotment A/c (2,00,000 x 15) 30,00,000 (Being application money transferred to share capital account) iii Equity Share Allotment A/c (400,000 * 25) Dr 1,00,00,000 . To Equity Share Capital A/c 1,00,00,000 (Being share allotment made due) iv Bank A/c (4,00,000 x 25) - (30,00,000)- (1,20,000) Dr}. | 68,80,000 To Equity Share Allotment A/c 68,80,000 (Being allotment money received on 3,94,000 shares) y | Equity Share Capital A/c (6,000 x 40) Dr 2,40,000 To Share Forfeiture A/c 1,20,000 To Equity Share Allotment A/c 1,20,000(Being 6,000 shares forfeited for non-payment of allotment money) vi Bank A/c (6,000 x 30) Dr 1,80,000 Share Forfeiture A/c Dr 1,20,000 To Equity Share Capital A/c 3,00,000 (Boing forfeited shares reissued @ 130 each as fully paid up) vy Pauity Share First and Final Call Ale (3,94,000 x sonaitba 10) Dr ‘To Equity Share Capital A/c 39,40,000 (Being first and final call money due) viii | Bank A/c (3,93,000 x 10) Dr 39,30,000 To Equity Share First and Final Call A/c Dr. 39,30,000 (Being first and final call money received on 3,93,000 shares) ix | Equity Share Capital A/c (1,000 x 50) Dr. 50,000 To Share Forfeiture A/c (1,000 x 40) 40,000 ea Share First and Final Call A/c (1,000 x ‘ea (Being 1,000 shares forfeiture for non-payment of first and f call) x Bank A/c (1,000 x 60) Dr. 60,000 ‘Yo Equity Share Capital A/c (1,000 x 50) 50,000 "To Securities Preminm Reserve Alc (1,000 x 10) 10,000 (Being forfeited shares reissued @ Rs. 60 each as fully paid up)xi Shares Forfeited A/c Dr. # 40,000 To Capital Reserve A/c 40,000 (Being gain on reissue transferred to capital reserve) Working Note:- Capital Reserve:- Number of shares applied by Vibhuti = 6,000 x 4° _ g 990 shares 3,00,000 Money paid by Vibhuti on application (8,000 x 15) 1,20,000 ( Amount adjusted with the application (6,000 x 15) (90,000) Excess application money adjusted on the allotment 30,000 Money due on the allotment (6,000 x 25) 1,50,000 () Excess application money adjusted (30,000) Money not paid by Vibhuti on the allotment 1,20,000 Money Received on Allotment:- Amount due on allotment (4,00,000 x 25) 1,00,00,000 (Excess application money adjusted (30,00,000) 70,00,000 () Money not received from Vibhuti on allotment 2,20,000) 68,80,000 1,00,000 Number of shares allotted to Shahid = 2,000 x 4 Srp ~ 1,000 Shares OR JOURNAL.| Amt. Amt. (@r.) (Cr.) Date | Particular Bank Ajc (1,24,000 x 2) Dr. 2,48,000 To Equity Share Application A/c 2,48,000 (Being share application money received.) Equity Share Application A/c Dr. 2,48,000 To Equity Share Capital A/c 80,000 To Equity Share Allotment A/c 1,47,000 To Bank A/c 21,000 (Being share application money adjusted) Equity Share Allotment A/c Dr. 1,80,000 To Equity Share Capital A/c (40,000 x 2) 80,000 To Securities Premium Reserve A/c (40,000 x 2.5) 1,00,000 (Being allotment money due on 40,000 equity shares @ Rs. 4.50 per share including a premium of Rs. 2.50 each) Bank Ajc Dr. 30,500 To Equity Share Allotment A/c 30,500 (Being allotment money received and excess on application adjusted) Equity Share First and Final Call A/c (40,000 x 6) Dr. 2,40,000 To Equity Share Capital A/c 2,40,000 | @eing first and final call money due on 40,000 equity shares @ Rs. 6 per share) Bank A/c Dr. 2,34,000 To Equity Share First and Final Call A/c 2,34,000 (Being share first and final call money received on 39,000 equity shares @ Rs. 6 each)Equity Share Capital A/c (1,000 x 10) Dr. 10,000 Securities Premium Reserve A/e (1,000 x 2.5) Dr. 2,500 To Forfeited Share A/c 4,000 To Equity Share Allotment A/c 2,500 To Equity Share First and Final Call A/c (1,000 x 6) 6,000 (Being 1,000 shares forfeited.) Working Note lica- | Applica- Ex E Applica: | Applica: Excess. [Excess | 4 tion tion | Money Appli- Refun- Shares Shares ment, ment i Money | Money on cation ded Applied Allotted Due @ Money Received| Trans- Applic- Money ___| Money Rs. 4.50 Required | @Rs.2 | ferred ation Adjusted 20,000 10,000 | 40,000 | 20,000 20,000 | 45,000 | 20,000 | 25,000 | _ 56,000 14,000 | 1,12,000| 28,000 | 84,000 63,000 | 63,000 _— | 21,000 48,000 16,000 | 96,000 | 32,000 | 64,000 72,000} 64,000 | 8,000 = 1,24,000, 40,000 | 2,48,000 | 80,000 | 1,68,000 1,80,000) 1,47,000 | 33,000 | 21,000 20,000 Number of shares applied by Ram = 1,000 x 7555 = 2,000 shares Surplus towards Allotment on Ram’s Shares Amt. (Rs.) Application money received (2,000 x 2) 4,000 () Application money required (1,000 x 2) (2,000) Surplus towards allotment 2,000 Calculation of Amount Received on Allotment Allotment money due (40,000 x 4.50) 1,80,000 () Excess received with the application (1,47,000)23. 24. 26. 27. 28. 33,000 () Calls-in-arrears (Ram) Due (1,000 x 4.50) 4500 (-) Surplus (2,000) (2,500) 30,500 Section B (a) Investing Activities Explanation: Rent Received is classified under investing Activities in preparation of the Cash Flow Statement of a company. It will be added because there is an inflow of cash. Proprietary Ratio compares proprietor’s fund with the total assets of an enterprise. In simple words, a proprietary ratio establishes the relationship between shareholders funds & total assets. It indicates the proportion of total assets financed by shareholder's funds. . (a) A company‘s Balance Sheet format is fixed under schedule III. Whereas, there is no standard form prescribed under the Indian Partnership Act,1932 for a partnership Firm’s balance sheet. Explanation: Partnership firm's balance sheet is a T format balance sheet where capital and liabilities are shown on left-hand side and assets are shown on the right-hand side. There is no need for subdividing assets and liabilities into subheads. A Company's balance sheet has a vertical format under which assets, liabilities and capital has to be subdivided into subheadings like shareholders fund, non-current assets, current assets, current liabilities etc. (b) Interest paid on long term loans Explanation: Interest paid on the long term loan is concerned with financing activities as Long term loan is Non-current Liabilities. There is an outflow of cash hence it should be deducted under financing activity. 1. Reserves, Surplus 2. Surplus, Reserves 3. Surplus, Reserves (b) 1.25:1 Explanation: Current Ratio = 1.25. i.e. Current Ratio = Current Assets/Current Liabilities29, 30. Current Ratio = 10,000,000/8000000 = 1.25 (by 1:1 Explanation: Ideal liquid ratio is 1:1 i.e. Liquid assets should be equal to the current liabilities. In other words it represents a more stringent test for the liquidity of a company in comparison to the current ratio Current Assets _ 2.8 Current Liabilities ~ “1 Let the Current Liabilities be Rs. x The Current Assets will be Rs. 2.8 x Current Ratio = Working Capital = Current Assets — Current Liabilities 36,000 = 2.8 X-X-1.8X +00? — Rs, 20,000 First calculate Current Assets than find Quick Ratio as follows:- . _ Quick Assets/ Liquid Assets Quick Ratio = —~“Gorrent Liabilities Current Assets= 2.8 x 20,000 X = Current Liabilities= Liquid Assets = Current Assets ~ Inventory Rs. 56,000 — 16,000 = Rs. 40,000 _ Rs-40,000 _ Quick Ratio = 35595 = 2h OR Eouity or Shareholders’ Funds Total Assets Equity or Shareholders’ Funds = Share Capital + Reserves and Surplus = Rs. 4,50,000 + Rs.1,80,000 = Rs. 6.320.000 1. Proprietary Ratio(also known as the Equity Ratio) = 30,000 : « . Fe Proprietary Ratio = F759. 000 =0.84:1 ‘Total Assets 2, Total Assets to Debt RAO = Da Tong Tern Liabilities _ e.7,50,000 ~ “Rs. 75,000 10:1 Total Assets to Debt Ratio = 10:1 Note:- Don't be confused about the Inventory amount which is not given because it is not needed while calculating any of the above-mentioned ratios.31. Common Size Balance Sheet of K Ltd. and L Ltd. as at 31.3.2012 Particulars Note No. | K Ltd. Litd. Amount Amount % of Total % of Total (Rs) (Rs) I. EQUITY AND LIABILITIES Shareholder's Funds Share Capital: 3,00,000 50 4,00,000| 53.3 Issued and paid-up 2,00,000| 33.3 | 3,00,000 40 Reserves and Surplus Current liabilities Short- term Borrowings: 1,00,000| 16.7 50,000 67 6,00,000 100 7,50,000 100 Il. ASSETS Non - Current Assets Fixed Assets 4,00,000 66.7 4,00,000 53.3 Current Assets 2,00,000 33.3 3,50,000 46.7 6,00,000 100 7,50,000 100 OR Comparative Statement of Profit and Loss for the year ended 31st March 2015 Absolute Change (increase and Decrease) Particulars 2014 2015 Percentage Change (crease and Decrease)32. @s) (%) L-Revenue'from 50,00,000 | 70,00,000] 20,00,000 40.00 Operations IL. Total Income 50,00,000 | 70,00,000/ —20,00,000 40.00 IIL. Expenses a) Employee Benefit 20,00,000 | 35,00,000 15,00,000 75.00 Expenses b) Depreciation 5,00,000 | 8,00,000 3,00,000 60.00 ©) Other Expenses 12,00,000 | 16,00,000/ —4,00,000 33.33 IV. Total Expenses 37,00,000 | 59,00,000, 22,00,000 59.46 (asb+c) V. Profit before Tax (II- i 13,00,000 | 11,00,000) —_(2,00,000) (15.38) ViTax @ 40% 6,20,000)| (4,40,000)| (80,000) (15.38) Profit after Tax 7,80,000 | 6,60,000 (1,20,000) (15.38) Cash Flow Statement for the year ended 31st March 2013 . Amount | Amount Particulars (Rs.) (Rs.) (A) Cash Flow from Operating Activities Net Profit before Tax and Extraordinary Items (WN 1) 2,70,000 Add: Non-cash and Non-operating Expenses : Depreciation on Equipment 18,000 Patents Written off 5,000 Loss on Sale of Equipment 12,000Operating Profit before Working Capital Changes 3,05,000 Change in Working Capital: Adjustment for Current Assets and Current Liabilities except for Cash and Bank: Trade Receivables(Debtors) (67,000) Inventories(Stock) (75,000) Trade Payables (Creditors) (3,000) Cash Flow from Operations 1,60,000 Less: Tax Paid (80,000) Cash Flow from Operating Activities 1,30,000 (B) Cash Flow from Investing Activities Proceeds from Sale of Equipment (WN 2) 70,000 Equipment Purchased (1,00,000) Investment Purchased (1,00,000) Cash Flow from Investing Activities (1,30,000) (C) Cash Flow from Financing Activities Cash Proceeds from Issue of Equity Shares 2,00,000 Repayment of Bank Loan 60,000) Dividend Paid i (60,000) Cash Flow from Financing Activities 1,00,000 (D) Net Increase in Cash and Cash Equivalents (A + B + C) 1,00,000 ‘Add: Opening Balance of Cash and Cash Equivalents 2,00,000 (E) Closing Balance of Cash and Cash Equivalents 3,00,000 Working Notes: AmountCalculation of Profit before Tax: (Rs.) Balance as per Statement of 1,50,000 Profit and Loss Add: Provision for Tax (current 50,000 year) Proposed Dividend (current 70,000 year) Net Profit before Tax 2,70,000 Calculation of the amount of Sale of Equipment: Equipment Account Dr. cr, Amount Amount Particulars Particulars Qs.) (Rs.) To Balance oa a 5,00,000 | By Depreciation A/c 18,000 ToBank A/c | 1,00,000 | By Bank A/c(Sale - Bal Fig.) 70,000 By Loss on Sale on Equipment (Statement of Profit 12,000 and Loss) By Balance c/d 5,00,000 6,00,000 6,00,000 Cash flows are classified as operating, investing, or financing activities on the statement of cash flows, depending on the nature of the transaction. Operating Activities include cash acti ies related to net income. Investing Acti\ ies include cash activities related to non-current assets. Financing Activities include cash activities related to non-current liabilities and owners’ equity. The operating activities section of the statement of cash flows is generally regarded as the most important section since it provides cash flow information related to the daily operations of the business.