SOLUTIONS...Premium on Redemption A/c Dr. To Debenture holders A/c (Amount due to debenture holders redeemable at a premium of 2%) 4,00,000 8,000 4,08,000 3 Debenture holders A To

CTF’s Sample Papers: Accountancy 12PB CTF’s Sample Papers: Accountancy 12 1

PART–A

(PARTNERSHIP AND COMPANY ACCOUNTS) 1. Yes, if all partners agree that one or more of them shall not bear the losses. 1 mark

2. Machinery Replacement Fund is in the nature of Accumulated Depreciation and not the Accumulated Profit and hence should not be distributed among the partners. 1 mark

3. General Reserve A/c Dr. 2,000 To Provision for doubtful debt 2,000 1 mark

(Being 20% of General Reserve transfer to Provision for doubtful debt) 4. 250 Shares. Total Face Value of Re-issue shares = Total Re-issue Price + Maximum discount = `3,000 + `2,000 = `5,000 Total Face Value of Re-issue shares No. of Reissue Share = --------------------------------------- 1 mark Face Value per Share `5,000 = -------- `50 = 100 Shares No. of Forfeited Shares = 100 Shares × 5/2 = 250 Shares 5. The Discount on Issue of Debenture can be written off during the life time of Debenture. 1 mark

6. Investment Fluctuation Reserve A/c Dr. 4,000 To Investment A/c 1,000 To X’s Capital A/c 1,000 To Y’s Capital A/c 1,000 1 mark

To Z’s Capital A/c 1,000 (Being Investment Fluctuation Reserve after Mkt Value fluctuation distributed among all

partners in old ratio on the retirement of Z) 7. Extract of Balance Sheet

3 marks

SOLUTIONS(PRACTICE SAMPLE PAPER-1)

Particulars Note No. (`)Equity and Liabilites I. Shareholder Fund Share capital 1 13,48,000

CTF’s Sample Papers: Accountancy 122 CTF’s Sample Papers: Accountancy 12 3

Notes to Accounts

Particulars Amount (`)Share CapitalAuthorised Share Capital2,00,000 Equity Shares of `10 each

Issued Share Capital1,80,000 Equity shares of ` eachSubscribed CapitalSubscribed but not fully paid up1,66,000 Equity Shares of `10 each, `8 Called up, 13,28,000

Less Call in Arrear (2,000 × 2) (4,000) 13,24,000 Add Share forfeited Account (4000 × 6) 24,000

20,00,000

18,00,000

13,48,000

8. Journal

Date Particulars L.F. Dr. Cr.Debenture Suspense A/c Dr.

To 15% Debenture A/c(Being the issue of 10,000, 15% Debenture of `100 each as collateral security for loan from a bank )

10,00,00010,00,000

An Extract of Balance Sheet of X Ltd.

Particulars Note No. Amount (`)

Non current LiabilitiesLong Term Borrowings 1 8,00,000

Notes to Accounts

Particulars Amount (`)

1. Long-term BorrowingLoan from ICICI Bank(Secured by Land & Building and the issue of 10,000, 15% Debenture of `100 each as collateral security)10,000, 15% Debenture of ` 100 each (issued as collateral security) 10,00,000Less: Debenture Suspense Account (10,00,000)

8,00,000

NIL8,00,000

3 marks


9. a) Value of Promoting Women Entrepreneurship. Value of Empathy. b) Journal S.No. Particulars L.F. Dr.(`) Cr.(`)

1 Cash A/c Dr.To Chandrika’s Capital A/cTo Premium for Goodwill A/c

(Being new partner capital and premium for Goodwill in cash)

90,00060,00030,000

2 Premium for Goodwill A/c Dr. To Ganga’s Capital A/c(Being the amount of premium brought by new partner given to old partners)

30,00030,000

3 marks

Calculation of Sacrificing Ratio— 1 – 1/4 = 3/4 Ganga's new share (3/4 × 1/2) = 3/8 Harry’s new share (3/4 × 1/2) = 3/8

Sacrificing Ratio = Old Ratio – New Ratio Ganga = 5/8 – 3/8 = 2/8 Harry = 3/8 – 3/8 = NIL

10. Journal Date Particulars L.F. Dr.(`) Cr.(`)

201631 March

Interest on 15% Debenture A/c Dr.To Debentureholder A/cTo TDS From Debenture interest A/c

(Being the Interest on Debenture is due)

4,5004050

450

31 March Debentureholder A/c Dr.To Bank A/c

(Being the payment of interest)

4,0504,050

31 March TDS From Debenture interest A/c Dr.To Bank A/c

(Being the payment of TDS is made)

450450

31 March Statement of Profit and Loss A/c (4,500 + 4,500) Dr.To Interest on Debenture A/c

(Being the transfer of Interest on Debenture to Profit & Loss A/c)

9,0009,000

3 marks


11. Total Capital of the firm = Adjusted Capital of all the partners 4 marks

= 33,000 + 70,500 + 90,500 Capital of the new firm = 1,94,000 David’ New Capital = 1,94,000 × 2/5 = 77,600 Aslam’ New Capital = 1,94,000 × 3/5 = 1,16,400

Cash Brought by David = 77,600 – 33,000 = 44,600 Cash Brought by Aslam = 1,16,400 – 70,500 = 45,900

Date Particulars L.F. Dr. (`) Cr. (`)1 April 2016

Cash A/c Dr.To David Capital A/cTo Aslam Capital A/c

(Being the capital of remaining partner proportionate in their new profit ratio by bringing necessary amount of cash)

90,00044,60045,900

1 April 2016

Naresh’s Capital A/c Dr.To Cash A/c

(Being Dues of Naresh Paid off)

90,50090,500

12. a) Calculation of R’s Share of Goodwill 4 marks

Total Profit = 1,20,000 + 60,000 – 20,000 + 80,000 = 2,40,000 R’s share of Profit credited during 4 years = 2,40,000 × 3/8 = 90,000 R’s share of Goodwill = 90,000 × 1/2 = 45,000 b) Calculation of R’s share of Profit Average Profit = (60,000 – 20,000 + 80,000)/3 + 10% = 40,000 + 10% of 40,000 = 44,000 R’s share of Profit = 44,000 × 73/365 × 3/8 = 3,300

Date Particulars L.F. Dr. (`) Cr. (`)14 March 2016

P’s Capital A/c Dr.S’s CapitalA/c Dr.

To R’s Capital A/c(Being R’s share of goodwill credited given by P & S in the gaining ratio of 4:11)

12,00033,000

45,000

14 March 2016

Profit and Loss Suspense A/c Dr.To R’s Capital A/c

(Being R’s share of Profit to the date of death adjusted)

3,3003,300

Working Notes: Calculation of Gaining Ratio P’s gain = 3/5 – 4/8 = 4/40 S’s gain = 2/5 – 1/8 = 11/40 Gaining Ratio = 4:11


13. Profit & Loss Appropriation Account for year ending 31 March, 2016

Particulars Amount (`) Particulars Amount (`)

To Partner’s Salary A/c Kalpana Capital

To Intrest on Capital A/cSanjana Capital 1,500 Kalpana Capital 900

To Divisible Profit

Sanjana’s Capital A/c 1860Kalpana’s Capital A/c 1240

1,250

2400

3100

By Profit & loss A/c(6,250 + 1,250 – 750)

6,750

6,750 6,750

Partner’s Capital Account 6 marks

Particulars Sanjana Kalpana Particulars Sanjana KalpanaBy Bal. b/d 25,000 15,000By Interest on Capital 1,500 900By Partner salary 1,250

To bal. c/d 28,360 18,390 By P&L App. (Divisible Profit) 1,860 1,24028,360 18,390 28,360 18,390

14. Journal

S.No. Particulars L.F. Dr. Cr.1 Surplus of Statement of Profit & Loss A/c Dr.

To Debenture Redemption Reserve A/c(Transfer of profit equal to 25% of the face value of debentures of `85,000 redeemed in cash)

21,25021,250

2 12% Debentures A/c Dr.Premium on Redemption A/c Dr.

To Debenture holders A/c(Amount due to debenture holders redeemable at a premium of 2%)

4,00,0008,000

4,08,000

3 Debenture holders A/c Dr.To 8% Preference Share Capital A/cTo Securities Premium Reserve A/c

(Redemption of Debentures by conversion into preference shares)

1,74,4201,55,040

19,380


Notes: 1. Holders of `1,71,000 Debentures have accepted the proposal (a) Total amount payable to them = `1,71,000 + 2% premium on `1,71,000 = `1,71,000 + `3,420 = `1,74,420 As a preference share of `20 is to be issued at `22.50, therefore The number of preference share to be issued = 1,74,420/22.50 = 7,752 shares Amount of preference share = 7,752 × ` 20 = `1,55,040 Premium on issue of preference shares = 7,752 × `2.50 = `19,380

2. Holders of ` 1,44,000 Debentures have accepted the proposal (b) Total amount payable to them = `1,44,000 + 2% premium on 1,44,000 = `1,44,000 + `2,880 = ` 1,46,880 As a new Debenture of ` 100 is to be issued at `96, therefore The number of new debentures to be issued = 1,46,880/96 = 1,530 debentures Amount of new 10% debentures = `1,530 × `100 = `1,53,000 Discount on issue of debentures = 1530 × `4 = `6,120 3. Amount of remaining debentures = `4,00,000 – `1,71,000 – `1,44,000 = `85,000 Amount payable to them in cash = `85,000 + 2% premium on `85,000 = `85,000 + `1700 = `86,700 4. Redemption of debentures in the first two cases was by conversion into new shares and

debentures. Hence there was no need to transfer to debenture redemption reserve. It is only in the third case, the debentures have been redeemed for cash. In this case, it is necessary to transfer 25% of the face value of debentures redeemed to debenture redemption reserve.

6 marks

4 Debenture holders A/c Dr.Discount on Issue of Debenture A/c Dr.

To 10% Debentures A/c(Redemption of Debentures by conversion into 10% debentures)

1,46,8806,120

1,53,000

5 Debenture holders A/c Dr.To Bank A/c

(Redemption of Debentures by Cash)

86,70086,700

6 Debenture Redemption Reserve A/c Dr. To General Reserve A/c(Transfer of Debenture Redemption Reserve to General Reserve on the redemption of all debentures)

21,25021,250


15. Journal

S.No. Particulars L.F. Dr. (`) Cr. (`)(a) i. X’s Capital A/c Dr.

To Realisation A/c(Being some debtors taken by X)

1,17,2001,17,200

(a) ii. Cash A/c Dr.To RealisationA/c

(Being the remaining debtor sold to debt collecting agency)

2,1002,100

(b) i. Y’s Capital A/c Dr.To Realisation A/c

(Being the sundry assets taken over by Y)

72,00072,000

(b) ii. Z’s Capital A/c Dr.To Realisation A/c

(Being the sundry assets taken over by Z)

29,60029,600

(c) Realisation A/c Dr.To Z’s Capital A/c

(Being Mrs Z’s Loan assumed by Z)

13,80013,800

(d) i. Realisation A/c Dr.To Bank A/c

(Being bill discounted with bank dishonoured)

1,0001,000

(d) ii. Bank A/c Dr.To Realisation A/c

(Being a first and final dividend of 25% received from the estate of Z)

250250

8 marks

16. Journal of Tushar Ltd.

S.No. Particulars L.F. Dr. (`) Cr. (`)1 Bank A/c (30,000 × 2) Dr.

To Share Application A/c(Being the Application Money received on 30,000 shares)

60,00060,000

2 Share Application A/c (30,000 × 2) Dr.To Share Capital A/c (20,000 × 2) To Bank A/c (6,000 × 2)To Share Allotment A/c (4,000 × 2)

(Being the Application Money adjusted & Surplus refunded)

60,00040,00012,000

8,000

3 Share Allotment A/c (20,000 × 5) Dr.To Share Capital A/c (20,000 × 3)To Securities Premium Reserve A/c (20,000 × 2)

(Being the allotment money due)

1,00,00060,00040,000


4 Bank A/c (`1,00,000 – 8,000 – 1,840) Dr.To Share Allotment A/c

(Being the remaining allotment money received on 19,600 shares)(See Working Notes 1, 2, 3)

90,16090,160

5 Share First Call A/c (20,000 × 3) Dr.To Share Capital A/c (20,000 × 3)

(Being the First Call Money due)

60,00060,000

6 Bank A/c (19,000 × 3) Dr.To Share First Call A/c

(Being the First Call Money received on 19,000 shares @ `3 per share)

57,00057,000

7 Share Capital A/c (400 × 8) Dr.Securities Premium Reserve A/c (400 × 2) Dr.

To Share Allotment A/c (`2,000 – 160)To Share First call A/c (`400 × 3)To Forfeited Shares A/c (`480 × 2)

(Being 600 shares forfeited for non-payment of allotment money and the First call money)

3,200800

1,8401,200

960

8 Share Second & Final Call A/c (19,600 × 2) Dr.To Share Capital A/c

(Being the second and final call due on 19,600 shares)

39,20039,200

9 Bank A/c (19,000 × 2) Dr.To Share Second and Final Call A/c

(Being the second and final call received on 19,000 shares)

38,00038,000

10 Share Capital A/c (600 × `10) Dr.To Share First Call A/c (600 × 3)To Share Second and Final Call A/c (600 × 2)To Forfeited Shares A/c (600 × 5)

(Being 600 shares forfeited for non-payment of the first call and final call)

6,0001,8001,2003,000

11 Bank A/c ( 800 × 9) Dr.Forfeited Shares A/c (800 × 1) Dr.

To Share Capital A/c (800 × 10)(Being the re-issue of 800 shares @ `9 as fully paid up)

7,200800

8,000

12 Forfeited Shares A/c (`560 + 1600) Dr.To Capital Reserve A/c

(Being the transfer of profits on re-issue)

2,1602,160

8 marks

Working Notes:

1. No. of Shares allotted to Ramesh = 480 × 20,000/24,000 = 400 Shares


2. Calculation of amount due but not received on allotment. Application received on applied shares (480 × 2) = 960 Less: Application money of allotted shares (400 × 2) = (800) ------ Excess Money 160

Allotment due on allotted shares (400 × 5) = 2,000

Less Excess Money = (160) ------ 1,840 ------3. Amount received on allotment (1,00,000 − 8,000 – 1,840) = 90,160

4. Calculation of Capital Reserve: Forfeited amount of 400 shares of Ramesh = 960 Forfeited amount of 400 shares of Mohan 3,000 × 400/600 = 2,000 ------- Total Forfeited amount of Re-issue shares = 2,960 Less Re issue discount = (800) ------- Capital Reserve 2,160 -------

OR

Journal of Sangam Ltd.

S.No. Particulars L.F. Dr. (`) Cr. (`)1 Bank A/c (92,000 × 2) Dr.

To Share Application A/c(Being the Application Money received on 92,000 shares)

1,84,0001,84,000

2 Share Application A/c (92,000 × 2) Dr.To Share Capital A/c (60,000 × 2) To Bank A/c (2,000 × 2)To Share Allotment A/c (30,000 × 2)

(Being the Application Money adjusted & Surplus refunded)

1,84,0001,20,000

4,00060,000

3 Share Allotment A/c (60,000 × 3) Dr.To Share Capital A/c

(Being the allotment money due)

1,80,0001,80,000

4 Bank A/c Dr.To Share Allotment A/c

(Being the Allotment money received)

1,08,0001,08,000


5 Share First & Final Call A/c (60,000 × 5) Dr.To Share Capital A/c

(Being the First Call Money due)

3,00,0003,00,000

6 Bank A/c Dr.To Share First & Final Call A/c

(Being the First Call Money received)

2,50,0002,50,000

7 Share Capital A/c (4000 × 10) Dr.To Share Allotment A/c (4,000 × 3)To Share First & Final call A/c (4,000 × 5)To Forfeited Shares A/c (4,000 × 2)

(Being 4,000 shares forfeited for non-payment of allotment money and the call money)

40,00012,00020,000

8,000

Notes: Allotment Money Not Received No. of Shares Forfeited = ------------------------------------ Allotment Money per Share

(`1,80,000 – `60,000 – `1,08,000) = --------------------------------------- `3 = 4,000 Shares17. Dr. Revaluation Account Cr.


To Provision for Doubtful Debts A/c 3,000 By Unexpired Fire Insurance Premium A/c 10,000

To Depreciation on Machinery A/c 12,000 By Land and Building A/c 50,000To Provision for outstanding Repairs A/c 15,000To Gain transferred to:

A’s Capital A/c 15,000B’s Capital A/c 10,000C’s Capital A/c 5,000 30,000

60,000 60,000

Dr. Partner’s Capital Account Cr.Particulars A (`) B (`) C (`) Particulars A (`) B (`) C (`)

To B’s Capital A/c 45,000 ------ 15,000 By Balance b/d 4,50,000 3,00,000 1,50,000

To Cash A/c ----- 50,000 ----- By Revaluation Gain A/c 15,000 10,000 5,000To Bills Payable ----- 20,000 ----- By A’s Capital A/c ----- 45,000 -----To B’s loan Transfer ----- 3,00,000 ----- By C’s Capital A/c ----- 15,000 -----To Balance c/d 4,20,000 ----- 1,40,000

4,65,000 3,70,000 1,55,000 4,65,000 3,70,000 1,55,000


Balance Sheet of A and C as at 31 March, 2016Liabilities Amount (`) Assets Amount (`)

Creditors 1,08,000 Cash at Bank 30,000

Outstanding Bill for Repairs 15,000 Stock 90,000B’s Loan 3,00,000 Debtors 1,00,000Bills Payable 20,000 Less: Provision 5,000 95,000Capital A/cs:

A 4,20,000C 1,40,000

Unexpired Fire Insurance 10,000Machinery 2,40,000

5,60,000 Less: Depreciation 12,000 2,28000Land & Building 5,00,000Add: Appreciation 50,000 5,50,000

10,03,000 10,03,000

OR

Dr. Revaluation Account Cr.


To Stock 7,000 By Provision for doubtful debt 500By Land and Building A/c 5,000By Accrued Income 1,000

To Gain transferred to:A’s Capital A/c 2,100B’s Capital A/c 1,400 3,500

By Bad Debt Recovered 4,000

10,500 10,500

Dr. Partner’s Capital Account Cr.Particulars A (`) B (`) C (`) Particulars A (`) B (`) C (`)

To Goodwill 600 400 ----- By Balance b/d 17,600 25,400 -----To Adv. Sus. A/c 600 400 ----- By C’s loan A/c 30,000

By Revaluation Gain A/c 2,100 1,400 -----By Premium A/c 7,200 3,600 -----

To Bank ----- 2,600 ----- By C’s Current A/c 4,800 2,400 -----To Balance c/d 40,000 30,000 30,000 By Workmen Comp. fund 600 400 -----

By Invest. Flu. Fund 300 200 -----By Bank 8,600 -----

41,200 33,400 30,000 41,200 33,400 30,000


Balance Sheet as at 31 March, 2016

Liabilities Amount (`) Assets Amount (`)

A’s Capital 40,000 Land & Building 11,000B’s Capital 30,000 Investments 4,500C’s Capital 30,000 Debtors 10,000

Less: Provision – 500 9,500Employees Provident Fund 1,000 Stock (30,000 – 7,000) 23,000Workmen Compensation Claim 1,000 Bank Balance 45,800

Accrued Income 1,000C’s Current Account 7,200

1,02,000 1,02,000

Working Notes: 8 marks

i) Calculation of Incoming Partner’s share, Sacrificing ratio and New ratio. New Share = Old Share – Share Surrendered A’s New share = 3/5 – (1/3 × 3/5) = 3/5 – 1/5 = 2/5 B’s New share = 2/5 – 1/10 = 3/10 C’s Share = 1/5 + 1/10 = 3/10 New Profit sharing ratio = 2/5:3/10:3/10 = 4:3:3 Sacrificing Ratio of A and B = 1/5:1/10 = 2:1 ii) Calculation of Incoming Partner’s Share of Goodwill

A. Average Profits = `(48,000 + 93,000 + 1,38,000)/3 = `93,000B. Normal Profit = `63,000C. Super Profit = `93,000 – `63,000 = `30,000D. Firms Goodwill = 30,000 × 2 = `60,000E. C’s Share of Goodwill = 60,000 × 3/10 = `18,000

iii) Total Capital = `30,000 × 10/3 = `1,00,000 A’s New Capital = `1,00,000 × 4/10 = `40,000 B’s New Capital = `1,00,000 × 3/10 = `30,000

Bank Account

Particulars Amount (`) Particulars Amount (`) To Balance b/d 25,000 By B’s Capital A/c 2,600

To Premium for Goodwill A/c 10,800 By Balance c/d 45,800To Bad debts recovered 4,000To A’s Capital 8,600

48,400 48,400


PART–B(ANALYSIS OF FINANCIAL STATEMENTS)

18. Short term Marketable Securities and Treasury Bill. 1 mark

19. Yes, the statement is correct. Operating activity. 1 mark

20. a) Window dressing refers to the presentation of a better financial position that what it actually is by manipulating the books of accounts. On account of such a situation financial analysis may give false information to the users.

b) Other Current Liabilities— i) Interest accrued and due/not due on borrowings ii) Income received in advance iii) Unpaid Dividend Other Current Assets— i) Prepaid Expenses ii) Accrued Income iii) Advance Tax 1+2 marks

21. a) Solvency means ability of the firm to pay long term Liabilities b) (Any Two Ratio) Debt 4,00,000 Debt Equity Ratio = = = 4:13 = 0.31:1 Equity 13,00,000 Equity = Share Capital + Reserve & surplus = 9,00,000 + 1,00,000 + 3,00,000 = 13,00,000 Revenue from operation 3,00,000Working Capital Turnover Ratio = = = 3 Times 1+2 marks Working Capital 1,00,000 Total Assets = Equity + Debt + Current Liabilities = 13,00,000 + 4,00,000 + 3,00,000 = 20,00,000 Current Assets = Total Assets – Non Current Assets = 20,00,000 – (13,00,000 + 3,00,000) = 4,00,000 Working Capital = Current Assets – Current Liabilities = 4,00,000 – 3,00,000 = 1,00,000 Net Profit before Interest, Tax and Dividend × 100 c) Return on Investment = Capital Employed

6,48,000 × 100 = = 38.12% 17,00,000 100 Profit before Tax = 3,00,000 × = 6,00,000 50 Profit before Tax and Interest = 6,00,000 + (4,00,000 + 12/100) = 6,48,000


22. Comparative Statement of Profit and Loss for the year ended 31 March, 2015 & 2016. 4 marks

A B C D = C – B E = D × 100/C

Particulars 2015 2016 Absolute Change %

I Revenue from Operation 3,00,000 3,60,000 60,000 20%II Other Income 1,20,000 1,44,000 24,000 20%Total Income 4,20,000 5,04,000 84,000 20%ExpensesCost of Material consumed

(1,80,000) (1,98,000) 18,000 10%

Expenses (18,000) (39,600) 21,600 20%Total Expenses 1,98,000 2,37,600 39,600 20%Profit before Tax 2,22,000 2,66,400 44,400 20%Tax (66,600) (79,920) 13,320 20%Profit after Tax 1,55,400 1,86,480 31,080 20%

23. Cash flow Statementfor the year ended 31st March, 2015

Particulars Amount (`) Amount (`)

A. Cash Flow from Operating ActivitiesNet Profit Before TaxAdjustment for:Depreciation on Plant & MachineryInterest on Mortgage Loan

Operating Profit before working capital changesAdd: Decrease in Current Assets: Inventory 1,20,000Add: Increase in Current Liability: Trade Payables 2,75,000 Less: Increase in Current Assets Trade Receivables Net Cash flow from Operating Activities

B. Cash Flow from Investing Activities

Purchase of Plant & Machinery

Net Cash used in Investing Activities

1,19,000

1,75,000 35,000

3,29,000

3,95,000

(4,40,000)

(7,25,000)

2,84,000

(7,25,000)


Working Notes: Profit after Tax & Extraordinary Items 45,000 Add: Transfer to General Reserve 30,000 Add: Dividend 44,000 Profit before Tax & Extraordinary Items 1,19,000

C. Cash Flow from Financing ActivitiesProceeds from Issue of SharesProceeds from Mortgage LoanPayment of Interest on Mortgage LoanPayment of Dividend

Net Cash Flow from Financing Activities

Net Decrease in Cash and Cash Equivalents

Add: Opening Balance of Cash & Cash Equivalents

3,50,0001,50,000

(35,000)

(44,000)4,21,000

(20,000)

40,000

Closing Balance of Cash & Cash Equivalents_______

20,000

Documents

SOLUTIONS...Premium on Redemption A/c Dr. To Debenture holders A/c (Amount due to debenture holders redeemable at a premium of 2%) 4,00,000 8,000 4,08,000 3 Debenture holders A To