KENDRIYA VIDYALAY SANGATHAN, JAMMU REGION

MARKING SCHEME SET-7

CLASS-XII SUBJECT-ACCOUNTANCY
.
Q .N. MARKS
Q1 Option (c) is correct. 1
Explanation: The discount on the reissue of forfeited shares cannot be more than the
forfeited amount of the shares, so it can be issued at a discount and it can be more than
10% if the forfeited amount is more than 10%.
Q2 Option (a) is correct. 1
OR
Option (b) is correct.
Explanation: Creditors to be paid = ₹ 50,000 - ₹ 10,000 = ₹ 40,000
5% of ₹ 40,000 = ₹ 2,000
₹ 40,000 - ₹ 2,000 = ₹ 38,000.
Q3 Option (c) is correct. 1
Explanation: In the absence of partnership deed, profits are to be distributed equally
among the partners.
Q4 Option (a) is correct. 1
OR
Option (c) is correct.
Explanation: Net amount of loss transferred to:
A's Capital Account: ₹ 87,000
C's Capital Account: ₹ 29,000
Q5 Option (d) is correct. 1
Explanation: When a new partner is admitted, an increase in the value of assets is debited
to the Assets account and reflected in the balance sheet and Revaluation Account. It is
credited to the Revaluation Account, and the Profit
and Loss Adjustment and old partners Capital Account are not used for asset and liability
revaluation.
Q6 Option (c) is correct. 1
Q7 Option (b) is correct. 1
Explanation: Except Product Method', all are methods of calculating goodwill. It is a
method of calculating drawings.
 OR
Option (c) is correct.
Explanation: According to the provisions of the Indian Partnership Act, 1932, a
partnership firm consists of two or more persons. It consists of a partnership agreement or
deed which consists of rules and regulations to be carried out by the partners. This
agreement can be oral or written.
Q8 Option (c) is correct. 1
Amount due on allotment (₹ 95000 x 4) ₹ 3,80,000
Less Allotment not received on 500 shares ₹ 2,000
Add First and Final call money received on 750 shares ₹ 2,250
Net amount received on allotment ₹ 3,80,250
Q9 Option (a) is correct 1
Q10 Option (d) is correct 1
Q11 Option (c) is correct 1
Q12 Option (b) is correct 1
OR
Option (d) is correct
Q13 Option (a) is correct 1
Q14 Option (a) is correct 1
Q15 Option (a) is correct 1
Q16 Option (b) is correct 1
3
Q17
Equity Share Capital A/c Dr. 700
To Calls in Arrears A/c 200
To Equity Share Forfeited A/e 500
(Forfeiture of 100 shares)
Bank A/c Dr. 640
To Equity Share Capital A/c 640
(80 shares reissued as ₹ 8 per share paid up for
8 per share)
Equity Share Forfeited A/c Dr. 400
To Capital Reserve A/c 400
(Gain on reissue of 80 forfeited shares
transferred to Capital Reserve @ 5 per share)
OR
Three types of share capital are:
(i) Authorized or Nominal Capital: It refers to the maximum capital that a company can
raise from the market It is stated in the capital cause of Memorandum of association of the
company A company cannot raise more capital beyond the authorised capital.
(ii) Issued Capital: It refers to that portion of the authorised capital which is actually in
 used to the public for subscription Normally companies do not exhaust their authorised
capital in the beginning but only a part of the authorised capital is issued for public
subscription.
(iii) Reserve Capital: It refers to that portion of the subscribed capital which is not called
up for payment in its life time. Reserve capital is called up at the time of liquidation of a
company by passing a special resolution.
3
Q18 Realisation Account
Particulars (₹) Particulars (₹
)
To Sundry Assets By Sundry Liabilities
Stock 24,000 Trade Creditors 42,000
Debtors 19,000 EmpProv. Fund 60,000
Furniture 40,000 Mrs. Ashish's Loan 9,000 1,11,000
Plant 2,10,000 ----------
Investment 32,000 3,25,000 By Investment Fluctuation
Reserve 4,000
To Ashish's Capital A/c 9,000 By Ashish's Capital A/c
(Mrs. Ashish's Loan) (Furniture) 38,000
To Kanav's Capital A/c 12,000 By Bank A/c (Assets):
(Remuneration) Debtors 18,500
To Bank A/c (EPF) 60,000 Plant 2,31,000
To Partners' Capital A/c Stock 15,840 2,65,340
(Gain):
Ashish 12012 By Kanav's Capital A/c
Kanav 8008 (Stock) 7,680
---------------- 20,020
4,26,020 4,26,020
 3
Q19 JOURNAL
Date Particulars L (₹) Dr. (₹) Cr
F
Radhika's Capital A/c Dr. 8,000
Bani's Capital A/c Dr. 12,000
Chitra's Capital A/c Dr. 4,000
To Profit & Loss A/c 24,000
(Being undistributed loss transferred to Partners'
Capital Accounts)
General Reserve Dr. 1,44,000
To Radhika's Capital A/c 48,000
To Bani's Capital A/c 72,000
To Chitra's Capital A/c 24,000
(Being General Reserve distributed to Partners'
Capital Accounts)
Radhika's Capital A/c Dr. 30,000
To Bani's Capital A/c 30,000
(Being adjustment entry made for goodwill)
Land A/c Dr. 1,80,000
To Revaluation A/c 1,80,000
(Being Land revalued)
Revaluation A/c Dr. 1,80,000
To Radhika's Capital A/c 60,000
To Bani's Capital A/c 90,000
To Chitra's Capital A/c 30,000
(Being gain on Revaluation transferred to
Partners Capital Accounts)

OR
Profit and Loss Appropriation Account
(for the year ended 31st March, 2020)
Particulars (₹) Particulars (₹)
To Interest on Capital: By Profit and Loss A/c (Net
Arun's Current A/c - 7,200 Profit) 12,600
Arora's Current A/c - 9,600 16800 By Interest on Drawings:
Arun's Current Ac 150
Arora's Current Ac 300 450

By Net Loss transferred to

Current A/c:
Arun 2,344
Arora 1,406 3,750
16,800 16,800
Q20 Average Profit = ₹ 80,000 3
Undervaluation of stock = ₹
8,000
Actual Average Profit = ₹ 80,000 + ₹ 8,000 = ₹ 88,000
Normal Profit = Capital Employed x Normal rate of return
 100
= ₹ 8,00,000 x 8 = ₹ 64,000
100
SP = Actual Average Profit - Normal Profit
=₹ 88,000 – ₹ 64,000 = ₹ 24,000
Goodwill = SP x No. of year’s purchases
= ₹ 24,000 x 7 = ₹ 1,68,000
4
Q21 Balance Sheet of Newbie Ltd. as at
Particulars Note No. (₹
)
Equity And Liabilities
1. Shareholders' Funds
(a) Share Capital 1 2,79,600

Notes to Accounts:
(1) Share Capital ₹
Authorised Share Capital:
50,000 Equity Shares of ₹ 10 each. 5,00,000
Issued Share Capital:
30,000 Equity Shares of ₹ 10 each 3,00,000

Subscribed Paid-up Capital:

28.000 Equity Shares of ₹ 10 each fully called up 2,80,000
Less: Calls Arrears (400) 2,79,600

4
Q22 SUDHA'S CAPITAL ACCOUNT
Particulars (₹ Particulars (₹
) )
To Sudha's Loan A/c 10,000 By Balance b/d 60,000
To Sudha's Executor's A/c 90,350 By General Reserve 3,000
By Rahim's Capital A/c 10,800
(Share of Goodwill)
(₹ 25,200 x 3/7)
By Kartik's Capital A/c
(Share of Goodwill) 14,400
(₹ 25,200 × 4/7)
By Interest on Capital 900
By Profit & Loss Suspense A/c 11,250
(Share of Profit)
1,00,350 1,00,350
Calculation of Sudha's Share of Goodwill :
Value of firm's Goodwill =Average Profits of last three years x two years Purchase.
= ₹ 42,000 x 2 = ₹ 84,000
Sudha's Share of Goodwill = ₹ 84,000 x 3/10 = ₹ 25,200
 Calculation of Sudha's Share of Profit:
Ratio of Profit to Sales = Profit (Last Year) x 100
Sales (Last Year)
₹ 1,00,000 x 100 = 25%
4,00,000
(i) Profit (from 1st April to 30th June, 2022)
= ₹ 1,50,000 x 25/100 = ₹ 37,500
= ₹ 37,500 x 3/10 = ₹ 11,250
6
Q23 JOURNAL
Date Particulars L. Dr. (₹) Cr. (₹)
F.
Bank A/c Dr. 1,05,000
To Debenture Application and Allotment Ac 1,05,000
(Being the application money received)
Debenture Application and Allotment Ac 1,05,000
Loss on Issue of Debenture Ac 2,000
To 12% Debentures A/c 1,00,000
To Securities Premium Reserve A/c 5,000
To Premium on Redem. of debentures Ac 2,000
(Being 1,000 debentures issued at a premium
of 5% and redeemable at 2% premium)
Vendor's Ac Dr. 9,00,000
Discount on Issue of Debentures Ne 1,00,000
To 12% Debentures A/c 10,00,000
(Being debentures issued to vendors at a
discount of 10%)
Debenture Suspense A/c 10,00,000
To 11% Debentures A/c 10,00,000
(Being 10,000, 11% debentures of 100 issued
as collateral security)
Q24 6
Realization Account
Particulars (₹ Particulars (₹)
)
To Stock A/c 10,000 By Provision for Bad Debts A/c 5,000
To Debtors A/c 25,000 By Sundry Creditors A/c 16,600
To Plant and Machinery 40,000 By Bills Payable A/c 3,400
To Bank A/c: By Mortgage Loan A/c 15,000
Sunday Creditors - 16,000 By Bank A/c (Assets Realized):
Bills Payable - 3,400 Stock 6,700
Mortgage Loan - 15,000 34,400 Debtors 12,500
Plant and Machinery 36,000 55,200
To Bank A/c (Out. Repairs) By Bank (Unrecorded Assets
To Bank A/c (Exp.) Realized) 6,220
400 By loss on realization
620 Bora capital A/c - 5,000
Singh capital A/c - 3,000
Ibrahim capital A/c - 1,000 9,000
1,10,420 1,10,420

Partners' Capital Accounts

Particulars Bora, Singh Ibrahim Particulars Bora, Singh Ibrahim
To Realization A/c 5,000 3,000 1,000 By Bal b/d 22,000 18,000 10,000
To Bank A/c 19,500 16,500 9,500 By General
Reserve 2,500 1,500 500
24,500 19,500 10,500 24,500 19,500 10,500

Bank Account
Particulars (₹ Particulars (₹
) )
To Bal. b/d 19,500 By Realization A/c 34,400
To Realization A/c (Assets 55,200 (Liabilities)
realized) By Realization A/c 400
To Realization A/c 6,620 (Unrecorded liabilities)
By Bora capital A/c 5,000
By Singh capital A/c 3,000
By Ibrahim capital A/c 1,000
80,920 80,920

Q25 6
Outstanding Expenses A/c Dr 18,000
To Bank A/c 18,000
(Being outstanding expenses paid off)
Bad Debts A/c Dr 5,000
To Debtors A/c 5,000
(Being bad debts written off)
Provision for Doubtful Debts Ac Dr 5,000
To Bad Debts Ac 5,000
(Being bad debts adjusted through provision for
doubtful Debts A/c)
 Revaluation Ac Dr 74,500
To Provision for Doubtful Debts A/c 2,500
To Machinery A/c 18,000
To Building A/c 54,000
(Being decrease in value of assets recorded)
Revaluation A/c Dr 5,000
Workmen Compensation Reserve Ac Dr 55,000
To Provision for Workmen Comp. Claim A/c 60,000
(Being claim on account of workmen
compensation provided in the books
Raman's Capital Ac Dr 59,625
Aman's Capital A/c Dr 19,875
To Revaluation A/c 79,500
(Being Revaluation loss distributed between old
partners)
Bank A/c Dr. 2,20,000
To Suman's Capital A/c 2,00,000
To Premium for Goodwill Ac 20,000
(Being capital and goodwill brought by Suman)
Premium for Goodwill A/c 20,000
To Raman's Capital A/c 15,000
To Aman's Capital A/c 5,000
(Being premium for goodwill distributed between
old partners in sacrificing Ratio)

OR
Revaluation Account
Particulars (₹ Particulars (₹
) )
To Prov. for Doubtful Debts A/c 3,100 By Land and Building A/c 12,000
To Furniture A/c 8,000
To Gain on Revaluation trans
to Capital A/c
A - 300
B - 300
C - 300 900
Partners' Capital Accounts
12,000 12,000
Particulars A B C Particulars A B C
To B's Capital 10,000 By Balance bd 60,000 40,000 32,000
A/c(Goodwill) By Revaluation
To B's Loan A/c 31,800 A/c (Gain) 300 300 300
To Bank A/c 20,000 By A’s Capital
(Balancing Fig.) A/c(Goodwill) 10,000
To Balance c/d 51,800 33,800 By WCR 1,500 1,500 1,500
61,800 51,800 33,800 61,800 51,800 33,800
 Bank Account
Particulars (₹) Particulars (₹)
To Balance b/d 20,000 By B's Capital A/c 20,000
To Furniture A/c (Sale) 20,000 By Balance c/d 20,000
40,000 40,000
Q26 Books of Guru Ltd. 6
Journal
Bank A/c 10,00,000
To Equity Share Application and Allotment A/c 10,00,000
(Being application and allotment money received
with premium)
Equity Share Application and Allotment A/c 10,00,000
To Equity Share Capital A/c 4,00,000
To Calls-in-Advance A/c 1,00,000
To Securities Premium Reserve Ac 4,00,000
To Bank A/c 1,00,000
(Being application and allotment money
transferred to share
capital)
Equity Share First and Final Call A/c 8,00,000
To Equity Share Capital A/c 4,00,000
To Securities Premium Reserve Ac 4,00,000
(Being call money due with premium)
Bank A/c 6,86,000
Calls-in-Advance A/c 1,00,000
To Equity Share First and Final Call A/c 7,86,000
OR
Bank A/c 6,86,000
Calls in Arrears A/c 14,000
Calls-in-Advance A/c 1,00,000
To Equity Share First and Final Call A/c 8,00,000
(Being call money received)
Equity Share Capital A/c 16,000
Securities Premium Reserve A/c 8,000
To Share Forfeiture A/c
To Equity Share First and Final Call A/c 10,000
(Being 1600 shares forfeited) 14,000
Bank A/c 14,400
Share Forfeited A/c 1,600
To Equity Share Capital A/c 16,000
(Being shares reissued)
Share Forfeited A/c 8,400
To Capital Reserve A/c 8,400
(Being balance of share forfeited transferred to
capital reserve A/c)
OR
Bank A/c 24,00,000
To Equity Share Application A/c 24,00,000
(Being application money received on 1,20,000
shares)
Equity Share Application A/c 24,00,000
To Equity Share Capital A/c 12,00,000
To Securities Premium Reserve 4,00,000
A/c To Equity Share Allotment A/c 4,00,000
To Bank A/c 4,00,000
(Being application money transferred to share
capital, securities premium reserve, share
allotment and the balance refunded)
Equity Share Allotment A/c 12,00,000
To Equity Share Capital 8,00,000
A/c 4,00,000
To Securities Premium Reserve A/c
(Being allotment money due on 80,000 shares)
Bank A/c 7,60,000
Calls-in-Arrears A/c 40,000
To Equity Share Allotment A/c 8,00,000
(Being allotment money received)
Equity Share First Call A/c 1200000
To Equity Share Capital A/c 1200000
(Being first call money due on 80,000 shares)
Bank A/c 12,10,000
Calls-in-Arrears A/c (First call) 30,000
To Equity Share First Call A/c 12,00,000
To Calls-in-Arrears A/c (Allotment) 40,000
(Being first call money received)
Equity Share Capital A/c 80,000
To Share Forfeiture A/c 50,000
To Calls-in-Arrears A/c 30,000
(Being Sahaj's shares reissued for ₹ 60 per share)
Bank A/c Dr. 1,20,000
To Equity Share Capital A/c 1,00,000
To Securities Premium Reserve A/c 20,000
(Being Sahaj's shares reissued for ₹ 60 per share)
Share Forfeiture A/c 50,000
To Capital Reserve A/c 50,000
(Being balance in share forfeiture
account transferred to capital reserve)
 PART –B
(Analysis of Financial Statements)
Q27 Option (c) is correct. 1
Explanation: Solvency ratio are calculated to determine the ability of the business to
service its debt in the long run.
OR
Option (d) is correct.
Explanation: Trade Receivables Turnover Ratio= Net Credit Revenue from
Operations/Average Trade Revenue.
Q28 Option (a) is correct. 1
Q29 Option (b) is correct. 1
Q30 Option (b) is correct. 1
Explanation: Cash flow from investing activities involves any cash or cash equivalents
spent on investments, gains or losses from investments, purchase or disposal of
property, plant, and equipment.
OR
Option (c) is correct.
Explanation: Inflow of cash will be ₹ 65,000.
Q31 Limitations of Financial Statements Analysis': 3
(i) It is a historical analysis as it analyses what has happened till date. It doesn't
reflect the future.
(ii) It ignores price level changes as a change in price level makes analysis of
financial statements of different accounting years invalid.
(iii) It ignores qualitative aspect as the quality of management, quality of staff, etc.
are ignored while carrying out the analysis of financial statements.
Q32 Particulars Major Heads Sub-Heads 3
(i) Stores and Spares Current Assets Inventories
ii) Provision for Tax Current Liabilities Short term Provision
(iii) Computer Software Non-Current Assets Fixed Assets - Intangible
Assets

Q33 ( i) Credit Revenue = X 4

Cash Revenue = 40X/100
40X/100 + X= ₹
8,40,000 X = ₹ 6,00,000
Credit Revenue from Operations = ₹
6,00,000 Receivables Turnover Ratio=
Net Credit Revenue from Operations/Average Trade Receivables
 ₹ 6,00,000/(₹ 1,20,000 + ₹ 2,00,000/2 = 3.75
(ii) Interest Coverage Ratio = Net Profit before Interest and Tax /Interest Obligation =
Interest Coverage Ratio = ₹ 7,82,000
Net Profit before Interest and Tax/ = ₹
7,82,000 Interest Obligation = ₹ 72,000
₹ 7,82,000/72,000 = 10.86 times
OR
Total Asset to Debt Ratio = Total Assets/Long-term debts
Total Assets Investment (₹ 1,20,000) + Land (₹ 10,00,000) + Trade Receivables
(₹ 3,00,000) + Cash and Cash Equivalents (₹ 1,80,000)
= ₹ 16,00,000
Long-term Debt = Capital Employed (₹ 22,50,000) - Equity Share Capital (₹
10,50,000)
- Capital Reserve (₹ 2,60,000) + Surplus (Balance in Statement of Profit and Loss)
(₹ 35,000)
= ₹ 9,75,000
Total Asset to Debt Ratio = ₹ 16,00,000/9,75,000 = 1.64:1
Q34 6
Particulars (₹ (₹
) )
(1) Cash Flow from Operating Activities
Net Profit before tax and extraordinary items (Note 1)
Add: Non-cash and non-operating charges: 87,500
Goodwill written off 12,500
Depreciation on machinery 27,500
Interest on debentures 10,500
Loss on sale of machinery 2,500
Operating profit before working capital changes 1,40,500
Less: Increase in Current Assets:
Increase in Inventories (12,500)
Net Cash generated from Operating Activities 1,28,000

(2) Cash Flow from Investing Activities

(1,75,000)
Purchase of machinery
7,500
Sale of machinery
(12,500)
Purchase of non-current investments
(1,80,000)
Net Cash used in investing activities
(3) Cash Flow from Financing Activities
Issue of share capital 50,000
Issue of 12% debentures 25,000
Interest on debentures paid (10,500)
Dividend paid (31,250)
 Bank overdraft raised 18,750 52,000
Net Cash flow from Financing Activities NIL
Net change in cash and cash equivalents (A+B+C)
Add: Opening balance of Cash and Cash Equivalents:
Current Investments 17,500 28,250
Cash and Cash Equivalents 10,750
Closing Balance of Cash and Cash Equivalents:
Current Investments 10,000 28,250
Cash and Cash Equivalents 18,250

Calculation of Net Profit before Tax:

Net profit as per Statement of Profit and Loss 56,250
Add: Dividend Paid 31,250
Net Profit before Tax and extraordinary items 87,500

MACHINERY ACCOUNT
Particulars (₹ Particulars (₹
) )
To Balance b/d 2,63,750 By Cash Ac 7,500
To Cash A/c (Purchase) By Statement of P and L
(Bal. fig.) 1,75,000 (loss on sale) 2,500
By Accumulated Dep. A/c 10,000
By Balance c/d 4,18,750
4,38,750 4,38,750
ACCUMULATED DEPRECIATION ACCOUNT
Particulars (₹) Particulars (₹)
To Machinery Ac 10,000 By Balance b/d 35,000
To Balance c/d 52,500 By Statement of P and L 27,500
62,500 62,500