saurabhjaitly.weebly.comsaurabhjaitly.weebly.com/uploads/1/0/1/9/10195001/... · Web viewA, B and C are partners in a firm having fixed capital of Rs. 80,000, Rs. 40,000 and Rs. 50,000

MODEL TEST PAPERSUBJECT ; ACCOUNTANCY (CLASS XII)

SET – IROLL NO _________TIME ALLOWED – 3 HRS. MAX MARKS : 80Day & Date of Examination :Name and Signature of Candidate :Name and Signature of Invigilator :General Instructions :(1) Please check that this question paper contains printed ___ pages(2) Please write down the serial number of the question before attempting it.(3) 15 minutes time has been allotted to read this question paper. The question paper will be distributed at 08:45

a.m. From 08:45 a.m. to 09:00 a.m. the students will read the question paper only and will not write any answer script during this period.

(4) Please check that this question paper contains 25 questions.(5) All questions are compulsory.(6) Marks are indicated against each question.(7) Avoid overwriting and cutting.(8) Give calculations or working notes wherever required.

PART – A(ACCOUNTING FOR PARTNERSHIP FIRMS AND COMPANIES)

1. What is meant by partnership and state any two essential elements of partnership. (1)2. State the two main rights that a newly admitted partner acquires in the firm. (1)3. When is the “Partner’s Executor’s A/c” is prepared ? (1)4. State any two factors which influence the valuation of goodwill of a partnership firm. (1)5. What are Preliminary Expenses ? (1)6. State any two purposes for which securities premium can be utilized. (1)7. Which companies are exempted from creating Debenture Redemption Reserve (DRR) by SEBI ? (1)8. A, B and C are partners in a firm having fixed capital of Rs. 80,000, Rs. 40,000 and Rs. 50,000 respectively

sharing profits as 7 : 6 : 4. The rate of interest on capital was agreed at 10% p.a. but was wrongly credited to them @ 12% p.a. Give the necessary adjustment entry to adjust the balance of partners capital a/c. (3)

9. Give the journal entries in each of the following cases at the time of issue of debentures.(1) A debenture issued at Rs. 110, repayable at Rs. 100(2) A debenture issued at Rs. 100, repayable at Rs. 105(3) A debenture issued at Rs. 105, repayable at Rs. 105 (3)

10. Mohit Ltd. Has 10,000 , 12% debentures of Rs. 100 each due for redemption on 31 st March 2011. Assuming that debentures are to be redeemed out of profit fully and DRR has a balance of Rs. 3,60,000 on that date, record necessary journal entries at the time of redemption of debentures. (3)

11. A, B and C were partners sharing profits in the ration of 5 : 3 : 2. Their Balance Sheet as on 1 st April 2012 was as follows :Balance Sheet of A, B and C as on 1st April 2012Liabilities Amount (Rs.) Assets Amount (Rs.)CreditorsEmployees Provident fundCapital :A Rs. 1,00,000B Rs. 70,000C Rs. 50,000

20,00026,000

2,20,000

CashDebtorsStockFurnitureBuilding

16,00016,00080,00034,0001,20,000

2,66,000 2,66,000C retires on the above date and it was agreed that :(1) C’s share of goodwill was Rs. 8,000

(2) 5% provision for doubtful debts was to be made on debtors(3) Creditors were valued Rs. 4,000 more than book value.

Pass the necessary journal entries for the above transactions on C’s retirement. (4)12. On 1st April 2012, an existing firm had assets of Rs. 75,000 including cash of Rs. 5,000 the partners capital a/cs

showed a balance of Rs. 60,000 and the reserve constituted the rest . If the normal rate of return is 10% and goodwill of the firm is to be valued at Rs. 24,000 @ 4 years purchase of super profit, find the average profits of the firm. (4)

13. X Ltd. Purchased machinery for Rs. 5,00,000 from Y Ltd. Rs. 1,25,000 was paid by issuing a crossed cheque, and Rs. 1,25,000 by accepting a bill of exchange drawn by Y Ltd. Payable after 3 months. The balance was paid by issue of equity shares of Rs. 10 each at a premium of 25 %. Pass the necessary journal entries. (4)

14. (a) Distinguish between reserve capital and capital reserve. (Any two)(b) What is meant by Private placement and Under-subscription of shares ? (4)

15. P, Q and R are partners with capitals of Rs. 40,000 , Rs. 30,000 and Rs. 20,000 respectively. The partnership deed provided the following :(1) R to get salary Rs. 2,000 p.a.(2) Q to get commission Rs. 1,500(3) P’s loan Rs. 20,000 @ 6% p.a.(4) Drawings of partners were : P : Rs. 5,000 ; Q : Rs. 4,000 and R : Rs. 3,000(5) Profit sharing ration 2 : 1 : 1

The profits for the year ended 31st December 2008 without taking the above facts amounted to Rs. 12,700.Prepare Profit & Loss Appropriation A/c and Partners’ capital a/c. (6)

16. A, B and C are partners in a trading firm, the firm has a fixed total capital of Rs. 60,000 held equally by all partners. Under the partnership deed, the partners were entitled to :(1) A and B to a salary of Rs. 1,800 and Rs. 1,600 per month respectively.(2) In the event of death of a partner, goodwill was to be valued at 2 years’ purchase of the averae profit of the

last 3 years.(3) Profit upto the date of death based on the profits of previous year.(4) Partners were to be charged interest on drawings @ 5% p.a. and allowed interest on capital @ 6% p.a.

B died on 1st Jan 2011, his drawings to the dte of death were Rs. 2,000 and the interest thereon was Rs. 60, the profits for the three years ended 31st March 2008, 2009 and 2010 were Rs. 21,200 ; Rs. 3,200 (Dr.) and Rs. 9,000 respectively. Prepare B’s Capital A/c to calculate the amount to be paid to his executors. (6)

17. Aamir and Anuj, belonging to two different religions and states of a country were close friends, formed a partnership. Their profit sharing ratio is 3 : 2Their balance sheet as at 31st March 2013 was under :Liabilities Amount (Rs.) Assets Amount (Rs.)CreditorsEmployees Provident fundGeneral ReserveWorkmen Compensation ReserveCapital A/c :Aamir : 15,000Anuj : 10,000

10,0008,000

30,00015,000

25,000

Debtors 22,000Less: Provision 1,000Land & BuildingPlant & MachineryStockBankAdvertisement Expenss

21,00018,00012,00011,00021,000

5,000

88,000 88,000

They admit Zeenat, a different abled girl as a third partner for 1/6 th share in the profit on the following terms :(1) Value of land and building be increased by Rs. 3,000(2) Stock is undervalued by Rs. 2,500(3) Provision for doubtful debts by increased by Rs. 1,500(4) The liability of workmen compensation reserve was determined to be Rs. 20,000(5) Zeenat brought her share of goodwill Rs. 10,000 in cash. Goodwill amount withdrawn by partners.(6) Zeenat was to bring in further cash of Rs. 15,000 as her capital(a) Prepare revaluation a/c, partners’ capital a/c and Balance sheet of new firm.(b) Identify any two values which according to you motivated them to form a partnership firm.

ORFollowing is the Balance Sheet of X and Y, who share profits and losses in the ratio of 4 : 1, as at 31 st March 2009 Liabilities Amount (Rs.) Assets Amount (Rs.)Sundry CreditorsBank OverdraftX’s Brother’s LoanY’s LoanInvestment Fluctuation FundCapital A/c :Aamir : 50,000Anuj : 40,000

8,0006,0008,0003,0005,000

90,000

BankDebtors 17,000Less: Provision 2,000StockInvestmentBuildingGoodwillProfit & Loss

20,000

15,00015,00025,00025,00010,00010,000

1,20,000 1,20,000

The firm was dissolved on the above date and the following arrangements were decided upon :(1) X agreed to pay off his brother’s loan(2) Debtors of Rs. 5,000 proved bad(3) Other assets realized – investment 20% less, and goodwill at 60%.(4) One of the creditors for Rs. 5,000 were paid only Rs. 3,000.(5) Building was auctioned for Rs. 30,000 and the auctioner’s commission amounted to Rs. 1,000 (6) Y took over part of stock at Rs. 4,000 (being 20% less than book value), balance stock realized 50%.(7) Realisation expenses amounted Rs. 2,000(8) A motor bike (which was brought out of the firm’s money) was not shown in the books of the firm. It is now

sold for Rs. 10,000.During the course of dissolution it was noticed by partners that the firm had taken goods worth R. 12,500 on credit from Mr. Mohit in the year 2007 but both the parties (i.e., the firm and Mr. Mohit) have forgotten the same to record in their respective books. Instead of charging interest amount due from the firm, Mr. Mohit himself agreed to accept Rs. 10,000 in full settlement of claim.

(A) Prepare realization a/c, partners’ capital a/c and Bank a/c(B) Identify the values which according to you motivated the firm to settle liability.(C) Identify the values which according to you motivated Mr. Mohit to accept Rs. 10,000 instead of Rs. 12,500

18. Dinesh Ltd. Invite applications for issuing 10,000 equity shares of Rs. 10 each. The amount was payable as follows :On application - Re. 1On allotment - Rs. 2On first call - Rs. 3On second & final call - BalanceThe issue was fully subscribed. Ram to who 100 shares were allotted failed to pay the allotment money and his shares were forfeited immediately after allotment. Shyam, to whom 150 shares were allotted, failed to pay the first call, his shares were also forfeited after the first call. Afterwards, the second & final call was made. Mohan to whom 50 shares were allotted failed to pay second & final call. His shares were also forfeited. All the forfeited shares were re-issued at Rs. 9/- per share fully paid up. Pass the necessary journal entries in the books of Dinesh Ltd.

OR(1) Poonam Ltd. Forfeited 400, 8% preference shares of R. 100 each, issued at discount of 10% for the non

payment of first call of Rs. 20 per share has not yet been made. The forfeited shares were re-issued at Rs. 44,000 fully paid. Pass the necessary journal entries for the forfeiture and issue of shares.

(2) X Ltd. Forfeited 150 shares of Rs. 20 each issued at premium of Rs. 5 per share for the non payment of second and final call of Rs. 7 per share. 100 of these shares were re-issued @ Rs. 21 per share fully paid. Journalise the above transactions regarding the forfeiture and re-issue.

(3) M Ltd. Forfeited 2000 shares of Rs. 10 each (fully called up) for the non-payment of allotment money of Rs. 6 per share including Rs. 2 as premium. Of these, 1,500 shares were re-issued to A @ Rs. 9 per share fully paid. Journalise the above transactions in the books of M Ltd.

PART –B(ANALYSIS OF FINANCIAL STATEMENTS)

19. Give two areas of interest for investors while analyzing the financial statements. (1)20. State any two objectives of preparing ‘Cash Flow Statement’ (1)21. Give one transaction which may result into outflow of cash and one which may result into no flow of cash. (1)22. Give the major headings and sub-headings under which the following items will be shown in a company’s

Balance Sheet as per revised Schedule VI, Part I of the Companies Act 1956 :(1) Trade payable(2) Loose tools(3) Gross Fixed Assets(4) Provision for tax(5) 8% Debentures(6) Statement of Profit & Loss

23. From the following statement of Profit & Loss of Goldstar Ltd. For the year ended 31 st March 2013 and 2014, prepare comparative Statement of Profit and Loss : (4)Particulars 31st March

2014 (Rs.)31st March 2013 (Rs.)

Revenue from operationsPurchase of Stock in TradeChange in inventories of stock in tradeEmployees benefit expensesOther incomes

20,00,0008,00,000

25,0003,00,0002,00,000

16,00,0006,40,000

15,0002,00,0003,00,000

24. (a) Current ratio of ABC Ltd. Is 5 : 1 and liquid ratio is 3 : 1, inventories are Rs. 2,00,000. Find current liabilities.(b) Cost of revenue from operations Rs. 2,40,000, inventories Turnover ratio 8 times. Find out the value of

opening inventories if, opening inventories is Rs. 10,000 less than the closing inventories.25. The Balance Sheet of Kewal Ltd. as at 31st March 2006 and 31st March 2007 were :

Particulars 31st March 2007 (Rs.)

31st March 2006 (Rs.)

I.EQUITY AND LIABILITIES 1. Shareholders’ funds (a) Share Capital (b) Reserves & Surplus : Balance Statement of Profit & Loss 2. Currrent Liabilities : Short term liabilities : Proposed dividend

10,00,0002,50,000

50,000

7,00,0001,50,000

40,000TOTAL 13,00,000 8,90,000II.ASSETS 1.Non Current Assets Fixed Assets (Tangible) Plant & Machinery 2.Current Assets (a) Inventories (Stock) (b) Cash

8,00,000

1,00,0004,00,000

5,00,000

75,0003,15,000

13,00,000 8,90,000Additional Information :(1) Rs. 50,000 deprciation has been charged to plant and machinery during the year 2007(2) A piece of machinery costing Rs. 12,000 (Book value Rs. 5,000) was sold at 60% profit on book value.

Prepare Cash Flow Statement. (6)


SET – IIROLL NO _________TIME ALLOWED – 3 HRS. MAX MARKS : 80Day & Date of Examination :Name and Signature of Candidate :Name and Signature of Invigilator :General Instructions :(9) Please check that this question paper contains printed ___ pages(10) Please write down the serial number of the question before attempting it.(11) 15 minutes time has been allotted to read this question paper. The question paper will be distributed at 08:45




1. What is a Partnership Deed ? State any two contents of a Partnership Deed. (1)2. What is meant by goodwill and its nature ? (1)3. Give any two circumstances in which gaining ratio may apply? (1)4. State any two occasions on which a partnership firm may be constituted. (1)5. What is meant by ‘Minimum Subscription’? (1)6. What is meant by forfeiture of shares ? . (1)7. What do you mean by debenture issued as collateral security? (1)8. A,B anc C are partners in a firm. On 1.4.2005, their capitals stood at Rs. 50,000, Rs. 25,000 and Rs. 25,000

respectively. As per the provisions of the partnership deed :(1) C was entitled for a salary of Rs. 5000 p.a.(2) Partners were entitled to interest on capital @ 5% p.a.(3) Profits were to be shared in the ratio of partners’ Capitals.The net profit for the year ended 2005-06 of Rs. 33,000 was distributed equally without providing above terms.Pass the adjustment entry in journal in rectify the above error. (3)

9. X Ld. Secured a loan of Rs. 8,00,000 from the Bank of Baroda by issuing 10,000 9% debenture of Rs. 100 each as a collateral security. How will you show the issue of such debenture in the Balance Sheet ? (3)

10. Thandak refrigerators Ltd. had an outstanding balance of Rs. 5,00,000 , 6% Debentures of Rs. 100 each redeemable at a premium of 10%. According to the terms of redemption, the company redeemed 10% of these debentures by converting them into 8% preference shares of Rs. 100 each issued at a premium of 10%. Calculate the number of shares to be issued on conversion and record the journal entries for the redemption.

(3)11. Pass the necessary journal entries for the following transactions on dissolution of the firm of A & B after the

various assets (other than cash) and outside liabilities have been transferred to realization a/c : C’s share of goodwill was Rs. 8,000(1) Stock of Rs. 7,400 was taken over by A for Rs. 7,000(2) B agreed to pay his wife’s loan Rs. 70,000(3) A liability not appearing in the books settled at Rs. 3,700(4) Loss on dissolution of Rs. 4,500 was divided between A & B in their profit sharing ratio 4 : 5 (4)

12. Arti and Bharti are partners in a firm sharing profits in the ratio of 3 : 2. They admitted Sarthi as a new parner and the new profit sharing ratio will be 2 : 1 : 1. Sarthi brought in Rs. 10,000 for her share of goodwill. Goodwill

already appeared in the books of Arti & Bharti at Rs. 5,000. Goodwill amount withdrawn by partners. Pass the necessary journal entries. (4)

13. 24 x 7 Marketing Ltd was authorized capital of Rs. 10,00,000 divided into 1,00,000 equity shares of Rs. 10 each. It has existing subscribed capital of 20,000 equity shares of Rs. 10 each and it further issued 50,000 equity shares to public for subscription on 1st Feb 2013 payable Rs. 5 along with the application Rs. 3 on allotment and balance on first & final call. All the shares were applied for and issued by the company. The company received allotment money on all the shares except on 2000 equity shares. Out of these 2000 equity shares first & final call on 1000 shares on which both allotment and calls were not paid were forfeited after giving due notice to the defaulting shareholders. Show shareholders in Balance Sheet of the Company at 31st March 2014. (4)

14. Exe Ltd purchased assets of the book value of Rs. 4,00,000 and took over the liabilities of Rs. 50,000 from Mohan Bros. It was agreed that the purchase consideration, settled at Rs. 3,80,000 be paid by issuing shares of Rs. 100 each.What journal entries will be made in the following cases : (a) At a discount of 10% ; and

(b) At a premium of 10%. It was agreed any fraction of shares be paid in cash (4)15. P & Q are partners sharing profit in the ratio 3 : 2 with a capital of Rs. 50,000 and Rs. 30,000 respetively. As per

partnership deed, partners agreed that :(1) Q be allowed salary of Rs. 5,000 p.a.(2) Interest on capital is agreed @ 6% p.a.During 2007, profit of the year prior to calculation of interest on capital but after charging salary amounted Rs. 15,000. A provision of 5% of profit be made for manager’s commission. Prepare Profit & Loss Appropriation a/c and Partners’ Capital A/c.(6)

16. On 31st Dec 2003, the Balance Sheet of P, Q and R who were partners in a firm was as under :Liabilities Amount (Rs.) Assets Amount (Rs.)S. CreditorsReserve fundCapital A/c :P : 15,000Q : 10,000R : 10,000

25,00020,000

35,000

Buildings InvestmentsDebtorsBill ReceivableStockCash

26,00015,00015,000

6,00012,000

6,00080,000 80,000

The partnership deed provides that the profit should be shared in the ratio of 2 : 1 : 1 and in the event of death of a partners, his executors will be entitled to be paid out :1) The capital to his credit at the date of Balance Sheet2) His proportion of reserve at the date of last Balance Sheet 3) His proportion of profits to the date of death based on average profit of the last three completed years,

plus 10%.4) By way of goodwill, his proportion of total profits for the three preceding years.5) The new profits for the last three years were : 2001 – Rs. 16,000 ; 2002 – Rs. 16,000 ; 2003 – Rs. 15,400R died on 1st April 2004. He had withdrawn Rs. 5,000 to the date of his death. The investments were sold at par and R’s executors were paid off.Prepare R’s capital a/c and R’s Executor’s a/c. (6)

17. A and B are partners in a firm sharing profits in the ratio of 3 : 2. Their Balance Sheet as at 31st Dec 2004 stood as :Liabilities Amount (Rs.) Assets Amount (Rs.)Capital a/c :A : 35,000B : 30,000General ReserveBills PayableBank LoanCreditors

65,00010,000

5,0009,000

36,000

MachineryFurnitureInvestmentStockPatentsDebtors 19,000Less Provision 2,000CashProfit and Loss

33,00015,00020,00023,000

3,000

17,00012,000

2,0001,25,000 1,25,000

On that date they admit C into partnership for 1/4th share in the profit on the following terms :(1) C brings capital proportionate to his share. He brings Rs. 7,000 in cash as his share of goodwill.(2) Debtors are all good.(3) An outstanding bill for repair Rs. 1000 will be brought in the books.(4) Half of the investment were to be taken over by A and B in the respective profit sharing ratio at book value.(5) Patents are valueless.(6) Partners agreed to share future profit in the ratio 3 : 3 : 2.Prepare revaluation a/c, partners capital a/c and Balance Sheet after admission of C into firm

ORJyoti, Ruchi and Yogesh were sharing profits and losses in proportion to their capitals. Their Balance Sheet as at 31st March 2012 was : Liabilities Amount (Rs.) Assets Amount (Rs.)S. CreditorsCapital A/c :Jyoti : 80,000Ruchi : 60,000Yogesh 40,000

21,600

1,80,000

BuildingMachineryStock Debtors 20,000Less Provision 400BankCash

1,00,0048,00018,000

19,6008,0008,000

2,01,000 2,01,000Ruchi decided to retire due to old age. They agreed to the following adjustment in the books of account to decide Ruchi’s share :(1) Building to be appreciated by 20%(2) The provision for doubtful debts to be increased by 5% on debtors.(3) Out of total insurance premium paid Rs. 3000 to be treated as prepaid insurance. This amount was earlier

debited to the profit & loss a/c.(4) Machinery to be depreciated by 20%.(5) Goodwill of the entire firm to be valued at Rs. 72,000. Ruchi’s share to be adjusted in the accounts of Jyoti

and Yogesh(6) Jyoti and Yogesh also decided that the total capital of the firm after Ruchi’s retirement be Rs. 1,80,000 in

their profit sharing ratio i.e., actual cash to be brought in or paid to a partner as the case may be.You are required to prepare the :(1) Revaluation a/c(2) Partners’ Capital a/c(3) Balance Sheet of Jyoti and Yogesh

18. Petromax Ltd. issued 50,000 shres of Rs. 10 each at a premium of Rs. 2 per share payable as Rs. 3 on application, Rs. 5 on allotment (including premium and the balance in equal instalments over two calls. Applications were received for 92,000 shares and the allotment was done as under :(A) Applicants of 40,000 shares – allotted 30,000 shares(B) Applicants of 40,000 shares – allotted 20,000 shares(C) Applicants of 12,000 shares – allotted nilSuresh, who had applied for 2,000 shares (category A) did not pay any money other than application money.Chander, who was allotted 800 shares (category B) paid the call money due along with allotment.All other allottees paid their dues as per schedule.(i) Pass the necessary journal entries(ii) Which value has been affected by the rejection of applications of category ‘C’. Suggest an alternative.

(8)

ORAB Ltd. invited applications for 40,000 equity shares of Rs. 10 each at a discount of 10%. The amount was payable as follows :On application - Rs. 4 per shareOn allotment - Balance after discountApplications were received for 60,000 shares. Applications for 12,000 shares were rejected and pro-rata allotment was made to remaining applicants. Excess money received on application was adjusted towards sums due on allotment. Mohan, to whom 400 shares were allotted failed to pay the allotment money. His shares were forfeited. The forfeited shares were re-issued @ Rs. 8 per share fully paid up,(1) Pass the necessary journal entries(2) Which value has been affected by rejection of applications. Suggest an alternative for the same.

PART –B(ANALYSIS OF FINANCIAL STATEMENTS)

19. ‘Analysis of Financial Statements ignores price level changes’. Comment (1)20. What will be the result in inflow, outflow or no flow of cash from the following transactions.

(1) Cash deposited into bank(2) Depreciation charged on plant and machinery. (1)

21. What is meant by a ‘Cash Flow Statement’ ? (1)22. List any two items each of the Balance Sheet of a company under the head ‘Reserves & Surplus’ , ‘Current

Liabilities’ and ‘Current Assets’. (3) 23. Prepare Comparative Statement of Profit and Loss from the following information (4)

Particulars 31st March 2014 (Rs.)


Revenue from operations (% of other income)Other incomeCost of material consumed (% of operating revenue)Other expenses ( % of material cost)Tax rate

300%Rs. 1,00,000

50%10%30%

200%Rs. 2,00,000

60%20%30%

24. From the following information, calculate any two of the following ratios : (4)(1) Gross Profit ratio (2) Working capital turnover ratio (3) Proprietary ratioInformation :Paid up Capital Rs. 8,00,000Current Assets Rs. 5,00,000Credit sales Rs. 3,00,000Cash Sales 75% of credit sales9% Debentures Rs. 3,40,000Current Liabilities Rs. 2,90,000Cost of goods sold (cost of revenue from operations) Rs. 6,80,000

25. The following Balances appeared in Machinery a/c and accumulated depreciation a/c in the books of Jai Bharti Ltd. :

Balances as at → 31st March 2003 (Rs.)


Machinery a/cAccumulated Depreciation a/c

17,78,9853,40,795

26,55,4504,75,690

Additional Information :Machinery costing Rs. 2,65,000 on which accumulated depreciation was Rs. 1,00,000 was sold for Rs. 75,000. You are required to :(a) Compute the amount of machinery purchased. Depreciation charged for the year ended and loss on sale of

machinery.(b) How shall each of the items related to machinery be shown in ‘Cash Flow Statement ? (6)


SET – IROLL NO _________TIME ALLOWED – 3 HRS. MAX MARKS : 80Day & Date of Examination :Name and Signature of Candidate :Name and Signature of Invigilator :General Instructions :(1) Please check that this question paper contains printed ___ pages(2) Please write down the serial number of the question before attempting it.(3) 15 minutes time has been allotted to read this question paper. The question paper will be distributed at 08:45




1. Give two circumstances in which the fixed capitals of partners may change ? (1)2. A & B share profit & loss in the ratio of 4 : 3. They admit C with 3/7 th share which he gets 2/7th from A and 1/7th

from B. What is the new profit sharing ratio ? (1)3. State any two items of deduction that may have to be made from the amount payable to a retiring partner ? (1)4. Name any two items which are credited to the account of deceased partner while calculating the amount due

to his legal representatives excluding opening balance of capital account. (1)5. Give any two alternatives available to a company for the allotment of shares in case of over subscription. (1)6. State any two conditions for the issue of shares at discount as per section 79 of the companies Act. (3)7. What is meant by Secured Debentures ? (3)8. A, B and C are partners in a firm sharing profit in the ratio of 2 : 2 : 1. C is guaranteed a minimum amount of Rs.

10,000 as his share of profit every year. Deficiency if any, on that account shall be borne by B. The profit for two years ended 31st March 2003 and 31st March 2004 were Rs. 50,000 and Rs. 40,000 respectively. Prepare the profit and loss appropriation account for the two years. (3)

9. SSS Ltd. issued 25,000 , 10% debentures of Rs. 100 each. Give the journal entries in the following case when : (3)(1) The debenture were issued at a premium of 20%.(2) The debenture were issued as a collateral security to bank against a loan of Rs. 20,00,000.(3) The debenture were issued to a supplier of a machinery costing Rs. 28,00,000 as his full and final payment.

10. Exe Ltd. issued 4,000 , 10% debentures of Rs. 100 each which are repayable at par after 5 years. However, company gave an offer to debenture holders to get their debentures converted into equity shares after 2 years.(1) Pass the necessary journal entries at the time of redemption of debentures.(2) Identify two values involved in this decision of the company. (3)

11. A, B and C were partners in a firm sharing profits equally. On 1.4.2012 B died. On that date, goodwill of the firm was valued at Rs. 90,000. There was a balance of Rs, 2,70,000 in General Reserve. As executors of B were not financially strong enough. So A proposes that the executors of B shall be given ½ share of general reserve and remaining portion shall be distributed between A and C in new ratio which is equal. C accepted to it.(a) Identify the two values which according to you motivated them to introduce such special clauses in the

Partnership deed.(b) Pass necessary journal entries on B’s death. (4)

12. A and B are partners with capitals of Rs. 1,60,000 and Rs. 1,20,000 respectively. They admit C as a partner on 1 st

Jan 2012 for 1/4th share in profits of the firm. C brings in Rs. 1,60,000 as his share of capital. Give the journal entries of C’s admission regarding goodwill. (4)

13. Akash Ltd. issued 1,00,000 shares of Rs. 10 each payable as follows – Rs. 2 on application payable on 1 st March 2006 ; Rs. 3 on allotment payable on 1st May 2006 ; Rs. 2 on first call payable on 1st Aug 2006 and Rs. 3 on second & final call on 1st Dec 2006. All these shares were subscribed for the amount duly received. Akriti, who had 8000 shares paid the amount on both the calls along with allotment. Suniti, who had 4000 shares, paid the amount to second and final call with the first call. Calculate the amount of interest on Calls-in-advance payable to Akriti and Suniti. Pass the necessary journal entries. (4)

14. (a) 20,000 shares of Rs. 10 were issued for public subscription at a premium of 10%. Full amount was payable on application. Applications were received for 30,000 shares and the Board decided to allot the share on pro-rata basis. Pass the necessary journal entries.(b ) Distinguish between shares and debentures (Any two points) (4)

15. (a) In a partnership, partners are charged interest on drawings @ 15% p.a. during the year ended 31 st March 2012. A partner drew as follows : (6)1st May Rs. 20001st Aug Rs. 500030th Sept. Rs. 200031st Jan Rs. 600031st Mar Rs. 2000What is the interest chargeable to the partner ?Also pass necessary journal entries.

16. A, B and C started business on 1st April 2011 with capitals of Rs. 1,00,000 ; Rs. 80,000 and Rs. 60,000 respectively sharing profits & losses in the ratio of 4 : 3 : 3. For the year ended 31st March 2012, the firm suffered a loss of Rs. 50,000. Each of the partners withdrew Rs. 10,000 during the year. On 31 st March 2012, The firm was dissolved. The creditors of the firm stood at Rs. 24,000 on that date and cash in hand was Rs. 4000. The assets realized Rs. 3,00,000 and creditors were paid Rs. 23,500 in full settlement of their claims. Prepare the realization a/c, partners capital a/c and Cash a/c. Also show your workings. (6)

17. A, B and C are partners sharing profit and losses in the ratio of 2 : 3 : 5. On 31 st March 2012, their balance sheet was : (8)Liabilities Amount (Rs.) Assets Amount (Rs.)Capital a/c :A : 36,000B : 44,000C : 52,000CreditorsB/PProfit & Loss A/c

1,32,00064,00032,00014,000

CashB/RFurnitureStockDebtorsInvestmentsMachineryGoodwill

24,00044,00028,00018,00042,00032,00034,00020,000

2,42,000 2,42,000They admit D into partnership from 1st April 2012 on the following terms :(1) Stock is undervalued by 10%(2) Furniture, investments, machinery to be depreciated by 15%(3) Prepaid salaries Rs. 800(4) Outstanding rent amounted to Rs. 1800(5) D brings in Rs. 32,000 as his capital and Rs. 6000 for goodwill in cash for 1/6 th share in profit.(6) Capital of the partners shall be proportionate to their profit sharing ratio taking D’s capital as base.(7) Adjustment of capital to be made in cash.Prepare revaluation a/c, partners capital a/c and Balance Sheet.

ORR, M and L are partners in a firm sharing profits in the ratio of 5 : 3 : 2. Partner R died on 20 th Feb 2011. The balance sheet of the firm on that date was as follows :Liabilities Amount (Rs.) Assets Amount (Rs.)Capital a/c :R : 12,000M : 16,000L : 10,000Loan from RGeneral ReserveCreditors

38,0007,000

20,00019,000

MachineryFurnitureStockDebtorsCashProfit & Loss A/c

41,0006,0009,000

15,0003,000

10,000

84,000According to the partnership deed, on the death of a partner, the executor of the deceased partner will be entitled to :(1) Balance in capital A/c(2) His share in profit & loss on revaluation of assets & liabilities which were as follows :

(a) Machinery is revalued at Rs. 45,000 and furniture at Rs. 7,000(b) A provision of 10% was to be created for doubtful debts.(c) There was an unearned income of Rs. 500 and accrued income of Rs. 500.

(3) The net amount payable to R was transferred to R’s executor’s loan a/c which was to be paid later. Prepare revaluation a/c, Partner’s capital a/c, R’s Executor’s a/c, Balance Sheet of L and M who decided to continue the business keeping their capital balances in their new profit sharing ratio. Any surplus or deficit was to be transferred to partner’s current a/c.

18. Arti Ltd. invited applications for issuing 80,000 shares of Rs. 10 each at a premium of Rs. 4 per share. The amount was payable as follows : (8)On application Rs. 5 per shareOn allotment Rs. 9 per share (including premium)Applications were received for 1,40,000 shares. Allotment was made on following basis :(1) To applicants of 80,000 shares - 60,000 shares(2) To applicants of 60,000 shares - 20,000 sharesMoney overpaid on applications was utilized towards sums due on allotmentRajiv belonging to category (1) who applied for 1,200 shares failed to pay his dues and his shares were forfeited. Pass the necessary journal entries.

ORJain Ltd. invited applications for issuing 75,000 equity shares of Rs. 200 each at a discount of 5%. The amount was payable as follows :On application Rs. 80On allotment Rs. 60On First & final call BalanceApplications for 70,000 shares were received. Allotment was made to all the applicants and the company received all the money due on allotment except from Ravi to whom 900 shares were allotment and his shares were immediately forfeited. Vishesh, the holder of 700 shares failed to pay first and final call, his shares were also forfeited. All the forfeited shares of Ravi and 350 shares of Vishesh were reissued for Rs. 195 per share fully paid up. Pass the journal entries.

PART – B(ANALYSIS OF FINANCIAL STATEMENTS)

19. The current ratio of a company is 2 : 1. State with reason whether the sale of goods Rs. 11000 (cost Rs. 10,000) would improve, reduce or not change the ratio. (1)

20. Give one limitation of Cash Flow Statement. (1)21. What are two major inflow and outflows of cash from financing activities. (1)22. Give the format of the balance sheet of a company main headings only, as per the requirement of schedule VI

of the Companies Act, 1956. (3)23. From the following Balance Sheet of Sanyog Ltd, prepare Common Size Balance Sheet : (4)

Particulars Note No. 31st March 2013 (Rs.)


I.EQUITY AND LIABILITIES 1. Shareholders’ funds (a) Share Capital (b) Reserves & Surplus 2. Non Current Liabilities Long term borrowings 2. Currrent Liabilities : Trade payables

40,00,0007,50,000

13,50,000

3,00,000

30,00,00010,00,000

9,00,000

2,00,000TOTAL 64,00,000 51,00,000II.ASSETS 1.Non Current Assets (a) Fixed Assets (1) Tangible Assets (2) Intangible Assets 2.Current Assets (a) Inventories (b) Cash & Cash equivalents

40,00,00013,00,000

8,00,0003,00,000

32,00,00011,00,000

6,00,0002,00,000

TOTAL 64,00,000 51,00,000

24. (a) Calculate the Debt to Equity ratio from the following :S.No. Items Amount (Rs.)1 Long Term Borrowings 2,00,0002 Long term Provisions 1,00,0003 Current liabilities 50,0004 Non-current liabilities 3,00,0005 Current Assets 40,000

(c) Calculate the current assets from the following information :(1) Stock turnover ratio : 4 times(2) Stock at the end is Rs. 20,000 more than stock in the beginning(3) Sales Rs. 3,00,000(4) Gross profit ratio 25%(5) Current liabilities Rs. 40,000(6) Quick ratio 0.75 (4)

25. From the following Balance Sheet of X Ltd., prepare cash flow statement :Particulars Note No. 31st March 2013

(Rs.)31st March 2012 (Rs.)

I.EQUITY AND LIABILITIES 1. Shareholders’ funds (a) Share Capital (b) Reserves & Surplus : Surplus i.e., balance in statement of Profit & Loss 2. Currrent Liabilities : (a)Trade payables (b) Other current liabilities

1 6,30,000

3,08,000

2,80,00014,000

5,60,000

1,82,000

1,82,00028,000

TOTAL 12,32,000 9,52,000II.ASSETS 1.Non Current Assets Fixed Assets : Plant and Machinery 2.Current Assets (a) Inventories (b) Cash & Cash equivalents (c ) Trade receivables

3,92,000

1,26,00084,000

6,30,000

2,80,000

1,82,00070,000

4,20,000TOTAL 12.32000 9,52,000Notes to accounts (1) Share Capital

Particulars 31st March 2013(Rs.)


Share CapitalEquity Share Capital8% Preference Share Capital

4,30,0002,00,000

3,60,0002,00,000

6,30,000 5,60,000Additional Information :

(1) An old machinery having book value of Rs. 42,000 was sold off Rs. 56,000(2) Depreciation provided on machinery during the year was 28,000(3) Dividend paid during the year Rs. 56,000 (6)

Accounting for Partnership Firms – Fundamentals

Q1. Which of the following statements will be applicable to Partnership firm in the absence of Partnership deed? (Any one of the following).

i) Salary allowed to a partner for extra work done.ii) Interest on capital of partners will be 5% p.a.iii) Interest on partner’s loan @ 6% p.a.iv) Profit sharing ratio.

Answer - i) No ii) No iii) Yes iv) Equal

Q2. List any two items appearing on the debit side of a partner’s current account.

Answer – i) Drawing ii) Interest on drawing.

Q3. List any four items that are credited to Capital Account of a partner when the capital Account is fluctuating.

Answer – i) Interest on Capital ii) Salary

iii) Commission iv) Profit Share

Q4. For how much period of Interest of drawing will be calculated if the equal amounts are drawn for one year.

i) On 1st Day of every Month , ii) End of every Month, iii) Middle of every Month

Answer – i) 6.5 Months ii) 5.5 Months iii) 6 Months.

Q5. State one difference between Fixed capital account and Fluctuating Capital account of Partners?

Q6. Ram and Shyam were partners in a firm sharing profits in the ratio of 3:5. Their fixed capitals were – Ram Rs. 5,00,000 and ShyamRs. 9,00,000. After the accounts for the year hadbeen closed, it was found that the interest on capital @10% p.a. as provided in partnershipagreement had not been credited to the Capital Accounts of the partners. Pass a necessary entry to rectify the error.

Solution:

Date Particulars L.F. Dr. (Rs.) Cr. (Rs.)

Ram’s Current A/C To Shyam’s Current A/C(For adjustment of omission of Interest on capital made)

2,5002,500

Q7. X, Y, and Z are partners sharing profits and losses in the ratio of 3:2:1. After the final accounts have been prepared, it was discovered that the interest on drawing had not been taken in to consideration. The interest on drawings of the partners amounted to X - Rs. 250, Y – Rs. 180 and Z – Rs. 100.

Give the necessary adjustment journal entry.

Solution:

Date Particulars L.F. Dr. (Rs.) Cr. (Rs.)Y’s Capital A/CZ’s Capital A/C To X’s Capital A/C (For Interest on drawing omitted, now corrected)

312

15

Q8. Malti, Paroand Arti are partners in a firm having fixed capital of Rs. 80,000, Rs. 40,000 and Rs. 50,000 respectively sharing profits as 7:6:4. The raet of Interest on capital was agreed at 10% p.a., but was wrongly credited to them as 12% p.a. Give the necessary adjustment entry to adjust the balance of Partner’s Capital Accounts.

Solution:

Date Particulars L.F. Dr. (Rs.) Cr. (Rs.)Malti’s Current A/CArti’s Current A/C To Paro’s Current A/C (Excess Interest on Capital credited, now corrected)

200200

400

Q9(a).Sachin, Kapil and Rashmi have been sharing profits and losses in the ratio of 3:2:1 respectively. Rashmi wants that she should share the profits equally with Sachin and Kapil. She further wants that change in profit sharing ratio should be applicable retrospectively for the last three years. Other partners have no objection to this. The profits for the last three years were Rs. 60,000, Rs. 47,000 and Rs. 55,000.

Record the adjustment by means of journal entry. Give working.

Solution:

Date Particulars L.F. Dr. (Rs.) Cr. (Rs.)Sachin’s Capital A/C Dr. To Rashmi’s Capital A/C (For change due to profit sharing ratio rectified)

27,00027,000

Q9(b). Point out whether any value is involved in the decision taken by Sachin and Kapil to share profit equally with Rashmi.

Solution: Following values are involved in this decision:

i) Promotion of equality among partners.ii) Showing respect towards woman partner by eliminating gender biasness.

Q10. A, B, and C were partners in a firm. On 1st January 2009, their capitals were Rs. 60,000, Rs. 30,000 and Rs. 30,000 respectively. As per partnership deed, partners were entitled to:

i) Salary to C atRs. 500 per monthii) Interest on Capital @ 5% p.a.iii) Profits to be shared in the Capital ratio.

Q11. A, B and C were partners in a firm having capitals of Rs. 60,000, Rs. 60,000 and Rs. 80,000 respectively. Their Current Account balances were A: Rs. 10,000; B: Rs. 5,000 and C: Rs. 2,000 (Dr.). According to the partnership deed the partners were entitled to interest on capital @ 5% p.a. C being the working partner was also entitled to a salary of Rs. 6,000 p.a. The profits were to be divided as follows:

i) The first Rs. 20,000 in proportion to their Capitals.ii) Next Rs. 30,000 in the ration of 5:3:2.iii) Remaining profits to be shared equally.

The firm made a profit of Rs. 1,56,000 before charging any of the above items. Prepare the Profit & Loss Appropriation Account and pass necessary journal entry for apportionment of Profit.

Answer:

Q12. A and B are partners sharing profits in the ration of 3:2 with capitals of Rs. 50,000 and Rs. 30,000 respectively. Interest on capital is agreed @ 6% p.a. B is to be allowed an annial salary of Rs. 2,500. During 1995, profits of the year prior to calculation of interest on capital but after charging B’s salary amounted to Rs. 12,500. Manager is to be allowed a commission of 5% on the profits remaining after deducting salary and interest on capitals but before charging such commission.

Prepare an account showing allocation of profits and partners capital accounts.

Solution:

Profit and Loss Appropriation Account

For the Year ending……..

Particulars Amount (Rs.) Particulars Amount (Rs.)To Interest on Capitals: A 3,000 B 1,800

To Manager’s Commission: 5% on (Rs. 12,500 – Rs. 4,800)i.e 7,700 * 5/100To Profit transferred to Capital A/c: A (3/5) 4,389 B (2/5) 2,926

4800

385

7,315

By Profit & Loss A/c(Net Profit after B’s Salary) 12,500

12,500 12,500

Capital Balances: A: Rs. 57,389 B: Rs. 37,226

Q13. A, B and C were partners in a firm sharing profits in the ration of 2:2:1. C was guaranteed to be given a profit of Rs. 50,000 per year. Deficiency if any, on that account hall be borne by A and B in the ratio of 3:2. The net profit of the firm for the year ended 31-3-2004 was Rs.2,00,000

Prepare Profit & Loss Appropriation Account of A, B and C.

Solution:

Particulars Amount (Rs.) Particulars Amount (Rs.)To Profit Trans. to Capital A/cs: A – 2/5 80,000 Less: Transfer to C 6,000

B – 2/5 80,000 Less: Transfer to C 4,000

C – 1/5 40,000 Add from: A 6,000 B 4,000

74,000

76,000

50,0002,00,000

By Profit & Loss A/c(Net Profit) 2,00,000

2,00,000

Q14. A and B are partners with capitals of Rs. 1,00,000 and Rs. 80,000 respectively. On 1 st January 2009, the trading profit of the firm for the year before appropriation as per partnership deed was Rs. 67,500.

As per partnership deed, they were entitled to:

i) Interest on Capital @ 9% p.a.ii) A to get salary Rs. 1,000 p.m.iii) B to get commission Rs. 10,000.iv) Drawings of A and B were Rs. 6,000 and Rs. 5,000 respectively and interest thereon amounts to Rs.

400 and Rs. 300 respectively.Show how the profits for the year 2009 will be distributed between A and B and also show Capital Accounts under:

a) Fixed Capitalb) Fluctuating Capital.

Answer:

i) Divisible Profit Rs. 30,000; A’s share Rs. 15,000 and B’s share Rs. 15,000 in ratio 1:1

(A) Capital of A - Rs. 1,00,000, B – Rs. 80,000; Current A/c: A – Rs. 29,600, B – 26,900

(B) Fluctuating Capital: A – Rs. 1,29,600, B – Rs. 1,06,900

Valuation of Goodwill

Q1. Define goodwill.

Ans. Goodwill refers to capacity of a Business to earn more profits over and above the normal profits earned by the similar frims.

Q2. State any four reasons for Valuation of goodwill in relation to partnership firm.

Ans. Valuation of goodwill is required whenever the mutual rights of partners change. It is required in following cases:

i) Change in the profit sharing ration among the existing partners.ii) Admission of a new partner.iii) Retirement of a partner.iv) Death of a partner.v) Sale of partnership firm.

Q3. Explain any three features of Goodwill.

Ans: Features of goodwill are:

i) In is an intangible asset but not a fictitious asset.ii) Value of goodwill is subject to change with the passage of time.iii) Valuation of goodwill is subjective in nature.

Q4. List any four factors that help in the creation of goodwill of a partnership firm.

Ans. Factors affecting valuation of goodwill are:

i) Location of business. ii) Nature of business. iii) Longevity of business.iv) Quality of products. v) Degree of competition. vi) Brand image.

Q5. A business has earned profits of Rs. 1,00,000; Rs. 80,000 and Rs. 60,000 during the last three years. The assets of the business are Rs. 8,00,000 and its external liabilities are Rs. 2,00,000. The normal rate of return is 10%. Find goodwill if

i) Goodwill is valued at 2 years purchase of average profit of last three years.ii) Goodwill is valued at 3 years purchase of super profits.iii) Goodwill is valued by capitalization of average profits.iv) Goodwill is valued by capitalization of super profits.

Ans.

Q6. The average capital employed in a business is Rs. 2,50,000 and average net profit earned is Rs. 35,000 p.a. The normal rate of return on average capital employed is 10%. The remuneration amounting to Rs. 5,000 p.a. is considered reasonable to owners. Compute goodwill on the basis of 2 years purchase of Super profit.

Solution:

i) Actual Average Profit: Rs. 35,000 – Rs, 5,000 = Rs. 30,000ii) Normal Profit = Rs. 2,50,000 * 10/100 = Rs. 25,000iii) Super Profit = Rs. 30,000 – Rs. 25,000 = Rs. 5,000iv) Goodwill = Super Profit * No. of Years Purchase

= Rs. 5,000 * 2 = Rs. 10,000

Q7. The average profit earned by a firm is Rs. 55,000 which includes abnormal income of Rs. 5,000 on an average basis. The capital invested in the business is Rs. 5,00,000 and the normal rate of return is 8%. Calculate goodwill of the firm on the basis of 4 times of super profit.

Solution:

Total average profit = Rs. 55,000

Less: Abnormal Profit = Rs. 5,000

i) Actual average Profit = Rs. 50,000

ii) Normal Profit = Capital Employed * Normal rate of return100

= Rs. 5,00,000*8 = Rs. 40,000

100

iii) Super Profit = Average Profit – Normal Profit = Rs. 50,000 – Rs. 40,000 = Rs. 10,000

iv) Goodwill = Super Profit * No. of Years Purchase = Rs. 10,000 * 4 = Rs. 40,000

Q8. The average profit of a firm is Rs. 1,20,000. The total tangible assets in this firm are Rs, 15,00,000 and outside liabilities are Rs. 4,00,000. The normal rate of return is 10% on capital employed. Calculate goodwill by capitalization method on the basis of

a) Super profit method. b) Average profit method.

Solution:

With the given information, we can use either of the two methods based on capitalization:

A) Based on Super Profiti) Capital employed or Net Tangible Assets = Tangible Assets – Outside Liabilities

= Rs. 15,00,000 – Rs. 4,00,000 = Rs. 11,00,000ii) Normal Rate of Return = 10%

iii) Normal Profit = Capital Employed * Normal rate of return 100

= Rs. 11,00,000 * 10 = Rs. 1,10,000

100

iv) Super Profit = Average Profit – Normal Profit = Rs. 1,20,0000 – Rs. 1,10,000 = Rs. 10,000

v) Goodwill = Super Profit * 100 Normal Rate of Return= Rs. 10,000 * 100 = Rs. 1,00,000

10

B) Based on Average Profiti) Average Profit = Rs. 1,20,000 ( Given)

Average Profit * 100

ii) Capital value of Average Profit = Normal Rate of Return

Rs. 1,20,000 * 100 = Rs. 12,00,000= 10

iii) Capital Employed (See Part A) = Rs. 11,00,000

iv) Goodwill = Capital Value of Average Profit – Actual Capital Employed = Rs. 12,00,000 – Rs. 11,00,000 = Rs. 1,00,000

Changein Profit Sharing Ratio

Q1. What is sacrificing ratio?Ans. The ratio in which the partners have agreed to sacrifice their share in profit in favour of other partner or partners, is called as sacrificing ratio.

Q2. Define gaining ratio?Ans. Due to change in the profit sharing ratio, one or more partners gain their profit share, it is called gaining ratio.

ADMISSION OF A PARTNER1 MARK QUESTION

Q1- State any one purpose for admitting a new partner in a firm.

Q2- State the two main rights that a newly admitted partner acquires in the firm.

3 MARKS QUESTION

Q3- P & Q are partners sharing profits in the ratio of 3:2.They admit R for ¼ th share. P & Q

decided to share profits equally. Calculate new profit sharing ratio & sacrificing ratio.

Ans: New Profit sharing ratio-3:3:2, sacrificing ratio- 9:1.

Q4- A & B are partners in a firm sharing profits in the ratio of 3:2. C is admitted as a partner. A

& B surrender ½ of their respective shares in favour of C. Find new profit sharing ratio &

sacrificing ratio.

Ans: New profit sharing ratio: 3:2:5. Sacrificing ratio: 3:2.

Q4- X & Y are partners sharig profits in the ratio of 7:5. They admit z as a partner who

acquires 1/12th share from X & 1/6th from Y as his share. Calculate new profit sharing

ratio & sacrificing ratio.

Ans: New profit sharing ratio-2:1:1. Sacrificing ratio- 1:2.

8 MARKS QUESTION

Q5- M & N are partners in a firm sharing profits in the ratio of 3:1. Their balance Sheet as on

31-03-2004 was as follows:

Liabilities Rs Assets Rs

Creditors

Bills Payable

Outstanding salary

Capitals

M 2,00,000

N 1,30,000

28,000

40,000

2,000

3,30,000

Cash

Debtors

Stock

Plant

Land & Building

50,000

60,000

40,000

1,00,000

1,50,000

4,00,000 4,00,000

On the above date O was admitted as a partner for 1/4th share in profits on following

terms:

(i) O will bring Rs 1,50,000 as his capital & Rs 90,000 as his share of premium for goodwill for his share of profits.

(ii) Plant is to be appreciated to Rs 1,30,000 & the value of land & building is to be appreciated by 5%.

(iii) Stock is overvalued by Rs 6,000.(iv) A provision for bad & doubtful debts is to be created at 5% on debtors.(v) There were unrecorded creditors Rs 4,500.

Prepare Revaluation Account, Partner’s Capital Accounts and the Balance Sheet.

Ans: Revaluation profit- Rs 24,000 , Capital Accounts- M- Rs 2,85,500, N- Rs 1,58,500,

O- 1,50,000. Balance Sheet – Rs 6,68,500.

Q6- A & B are equal partners. On 1st January 2009, they decided to admit C into partnership

on the basis of the following Balance Sheet as on 31-12-2008:


Creditors

Outstanding expenses

Workmen’s compensation fund

Capitals:

A 50,000

B 40,000

Employees Provident Fund

16,000

3,000

5,000

90,000

4,000

Cash at bank

Debtors

Less: Provision for d/d

Stock

Fixed Assets

Profit & Loss A/c

10,800

17,200

32,000

55,000

3,000

1,18,000 1,18,000

The following terms were agreed upon:

(i) New profit sharing ratio should be 2:1:1 respectively and C brought Rs 30,000 as capital.(ii) Fixed assets is to be appreciated by Rs 10,000.(iii) Bad debts amounting to Rs 2,000 to be written off.(iv) A provision of 2% was to be made for discount on creditors.(v) Outstanding expenses be brought down to Rs 2,440.(vi) The liability on workmen’s compensation fund is determined at Rs 2,000.(vii) Employees provident fund be raised by Rs 1,000.(viii) C is unable to bring goodwill in cash. Goodwill is valued at Rs 28,000.

Prepare Revaluation Account, Capital Accounts and Balance sheet of new firm.

Ans: Revaluation profit- Rs 8,680, Capitals- A- Rs 54,340, B- Rs 51,340, C-Rs 23,000,

Balance Sheet total- Rs 1,53,800.

Q7- P & Q are partners sharing profits in the ratio of 4:3. Their Balance Sheet is as follows on

31-03-2008:


Creditors

Bills Payable

R’s Loan

Reserve Fund

Capitals:

P 40,800

Q 36,000

26,000

10,500

25,000

7,700

76,800

Bank

Debtors 40,000

Less: Prov. d/d 1,500

Stock

Investment

Plant

Goodwill

10,000

38,500

41,000

16,000

30,000

10,500

1,46,000 1,46,000

R is admitted into partnership. New profit sharing ratio is 3:2:1. Other terms were:

(i) R’s loan be treated as capital.

(ii) Goodwill is valued at 2 years’ purchase of average profits of 3 years which was Rs 12,600.

(iii) P & Q took over investments for Rs 10,500 in their profit sharing ratio.(iv) Provision for doubtful debts should be 5% on debtors & provision for discount on debtors

@ 2% be made.(v) Stock be reduced by 10% & plant is valued at Rs 32,000.(vi) R is not to bring his share of goodwill in cash.

Prepare Revaluation account , capital Accounts & Balance sheet.Ans: Revaluation Loss: 3,360, Capitals P- Rs 33,080, Q- Rs 31,260 ,R- Rs 20,800, Balance Sheet- Rs 1,21,640.Q8- P & Q are partners sharing profits in the ratio of 2:1. Their balance sheet as on 31st

December 2008 was as follows:


Bank Overdraft

Creditors

Reserve Fund

Capitals

P 40,000

Q 30,000

5,000

30,000

12,000

70,000

Debtors 40,000

Less: Prov. d/d 3,600

Stock

Patents

Machinery

Building

36,400

20,000

2,000

23,600

35,000

1,17,000 1,17,000

R was admitted on this date. New profit sharing ratio agreed was 3:2:1.

(i) R brings in Rs 19,120 as capital & Rs 10,000 as his share of goodwill in cash.(ii) Provision for doubtful debts be reduced by Rs 2,400.(iii) Investments worth Rs 2,600 remains unrecorded in the books. It is to be recorded now in the

books.(iv) Patents are valueless.(v) 2% discount is to be received on creditors.

Prepare Revaluation Account, Capital Accounts & the Balance Sheet.

Ans: Revaluation profit Rs 3,600 , Capitals: A- 60,400, B- Rs 35,200, C- Rs 19,120,

Balance sheet- Rs 1,44,120

Q9-B & C were partners sharing profits in the ratio of 3:2. Their Balance Sheet as o 31-03-2011

was as follows:


Capitals

B 60,000

C 40,000

Provision for bad debts

Creditors

1,00,000

1,000

60,000

Land & Building

Machinery

Furniture

Debtors

Cash

Profit & Loss A/c

80,000

20,000

10,000

25,000

16,000

10,000

1,61,000 1,61,000

D was admitted to partnership for 1/5 share of profits on the following terms:

(i) The new profit sharing ratio is 2:2:1.(ii) D will bring Rs 30,000 as capital & Rs 15,000 for his share of goodwill.

(iii) Half of the goodwill amount was withdrawn by the partner who sacrificed his share of profit in favour of D.

(iv) A provision of 5% of bad & doubt ful debt was to be maintained.(v) An item of Rs 500 included in creditors was not likely to be paid.(vi) A provision of Rs 800 was to be made for claims for damages against the firm.

After making the above adjustments the capital accounts of B & C were to be adjusted on the basis of D’s capital. Actual cash to be brought in or paid off.

Prepare Revaluation Account, Partner’s Capital Accounts & Balance Sheet.

Ans: Revaluation Loss Rs 550, capitals- B-Rs 60,000, C -Rs 60,000, D- Rs 30,000,

Balance sheet Rs 2,10,300.

Q10-A & B are partners sharing profits in the ratio of 3:2. They admit C for 1/5 share in

Profits who was an unemployed graduate. On that date Balance Sheet was as under-


Capitals

A 60,000

B 50,000

General reserve

Sundry Creditors

1,10,000

10,000

50,000

Goodwill

Plant & Machinery

Furniture

Investments

Stock

Sundry Debtors

Cash in hand

5,000

65,000

15,000

20,000

20,000

30,000

15,000

1,70,000 1,70,000

C was admitted on following terms:

(i) C is to bring in Rs 40,000 as capital & goodwill Rs 15,000. New Profit sharing ratio is 5:3:2.(ii) Investments will be appreciated by 20 % & furniturs will bw depreciated by 10%.(iii) One customer who owed the firm Rs 2,000 becomes insolvent & nothing could be realized

from him.(iv) Creditors will be written off Rs 2,000.(v) Outstanding bill for repairs Rs 1,000 will be provided for.(vi) Interest accrued on investments Rs 2,000.(vii) Capitals of the partners shall be in profit sharing ratio on the basis of C’s capital.

Prepare Revaluation account, Capital Accounts & the Balance Sheet of new firm.Point out the values involved.

Ans: Revaluation profit Rs 3,500, Capitals A – Rs 1,00,000, B- Rs 60,000 C Rs 40,000.

Balance Sheet Rs 2,49,000

Values- creating employment opportunities, Promoting entrepreneurial opportunities.

RETIREMENT OF A PARTNER FROM PARTNERSHIP FIRM

3 MARKS QUESTION

Q1- X, Y & Z are partners sharing profits in the ratio of 4:3:2. X retired due to prolonged illness & his share is being taken by Y & Z in the ratio of 2:3. As per deed the amount due to X is to has to be paid in 3 annual installments, but they decided to make full payment in cash immediately. They took bank loan for this purpose. You are required to calculate new profit sharing ratio. Also identify the values involved in taking such decision.

Ans: New profit ratio- 23:22.

(i) Values involved- recognition of personal relations over business relations, (ii) Just & equitable in making prompt payment in cash, (iii) Fulfillment of moral values & human values towards retired person.

Q2- A, B & C are partners sharing profits in the ratio of 4:3:2. B retires & Goodwill of the firm is valued at Rs 18,000. Pass journal entry for the treatment of goodwill.

Ans: Gaining ratio: 2:1.

Journal

Date Particulars LF Dr Cr

A’s capital A/c Dr

C’s Capital A/c Dr

To B’s capital A/c

(Being B’s share of goodwill adjusted through capital accounts.)

4,000

2,000

6,000

Q3- A, B & C are partners sharing profits in the ratio of 4:3:3. On C’s retirement the value of firm’sgoodwill was agreed at Rs 30,000. A & B agreed to share profits & losses in the ratio of 7:3 respectively. Give necessary journal entry for the treatment of Goodwill.

Ans: Journal


A’s capital A/c Dr

To C’s capital A/c

(Being C’s share of goodwill adjusted with gaining partner A.)

9,000

9,000

Q4- X, Y & Z were partners sharing profits in the ratio of 3:2:1. Z retired & new profit sharing ratiobetween X & Y was 1:2. On Z’s retirement the goodwill of the firm was valued at Rs. 30,000. Passnecessary journal entry for treatment of goodwill.

Ans: Journal


Y’s Capital A/c Dr

To X’s capital A/c

10,000

5,000

To Z’s Capital A/c

(Being Y compensated X & Z for their sacrifice in the form of goodwill.)

5,000

8 MARKS QUESTIONQ5- On 31st December, 2006 the Balance sheet of A, B & C who were sharing profits in the ratio of their capitals stood as follows:


Creditors

Capitals

A 45,000

B 30,000

C 15,000

10,800

90,000

Cash at bank

Debtors 10,000

Less: Prov. For d/d 200

Stock

Machinery

Land & Building

8,000

9,800

9,000

24,000

50,000

1,00,800 1,00,800

B retires & following adjustments of assets & liabilities have been agreed upon before the ascertainment of the amount payable to B.

(i) That land & Building be appreciated by 12%.(ii) That provision for doubtful debts be brought upto 5% of debtors.(iii) That a provision of Rs 3,900 be made in respect of outstanding bill for repairs.(iv) That goodwill of the entire firm be fixed at Rs 18,000 & B’s share of the same be adjusted

through the capital accounts of A & C who have agreed to share future profits in the ratio of 3:1.

(v) That B be paid Rs 5,000 immediately and the balance be transferred to his loan account.Prepare Revaluation Account, Capital Accounts & the Balance Sheet of the new firm.

Ans: Revaluation profit Rs. 1,000, Capitals A- Rs. 41,400, C- Rs. 13,800, B’s Loan- Rs. 31,600 Balance Sheet Rs. 1,01,500.

Q6- A, B & C were equal partners. On 31st December 2008 the Balance Sheet of the firm was asfollows :


Creditors

Provision for doubtful debts

Reserve

Provident Fund

Capitals-

A 30,000

B 30,000

C 28,000

36,000

1,000

21,000

4,000

88,000

Cash at Bank

Debtors

Stock

Building

Goodwill

10,000

30,000

35,000

57,000

18,000

1,50,000 1,50,000

On 1st January, 2009, B retires & the following conditions were agreed upon:

(i) The Value of building be appreciated to Rs 65,000 & stock be reduced by Rs 3,000.(ii) A debtor for Rs 3,000 became insolvent & nothing could be recovered from him.(iii) Liability for provident fund is Rs 500 more.(iv) There is also a unforeseen liability for Rs 1,000.(v) A & C agreed to share future profits in ratio 2:1.(vi) Goodwill of the firm was valued at Rs 30,000.(vii) B is paid Rs 6,500 in cash & balance be transferred to his loan account.

Prepare Revaluation Account, Capital Accounts & Balance Sheet of A & C.Ans: Revaluation profit Rs 1,500 , Capitals A- Rs 21,500 C- Rs 29,500, B’s loan Rs 35,000, Balance sheet Rs 1,27,500.Q7- A, B & C were in partnership sharing profits in proportion to their capitals. Their Balance sheet as on 31-03-2008 as follows:


Creditors

Reserve

A’s Capital

B’s Capital

C’s Capital

15,600

6,000

90,000

60,000

30,000

Cash at Bank

Debtors 20,000Less: Prov. For Bed Debts 400

Stock

Machinery

Building

16,000

19,600

18,000

48,000

1,00,000

2,01,600 201,600

On the above date, B retired due to ill health and following adjustments were agreed upon:

(i) Building be appreciated by 10%. (ii) Provision for doubtful debts be increased to 5% of debtors.(iii) Machinery be Depreciated by 15%.(iv) Goodwill of the firm was valued at Rs 36,000 and adjusted into capital accounts of A & C. Who

will share profits in future in the ratio of 3:1. (v) A provision be made for outstanding repairs bill for Rs. 3,000.(vi) Included in the creditors is Rs. 1,800 for an outstanding legal claim, which is not likely to arise. (vii) Out of the insurance premium paid, Rs. 2,000 is for next year but it was debited to profit and

loss account.(viii) Partners decide to fix the capital of new firm as Rs. 1,20,000 in the profit sharing ration(ix) B is to be paid Rs. 9,000 in cash and balance to be transferred to his loan account.

Prepare Revaluation Account, Partners Capital Accounts & Balance Sheet of new firm.

Ans: Revaluation profit Rs. 3,000, Capital’s A Rs. 90,000, C Rs. 30,000. B’s loan account Rs. 66,000,Balance Sheet total Rs. 2,02,800.

DEATH OF A PARTNER

6 MARKS QUESTION

Q8. Arti, Bharti and Seema are partners sharing profits in the proportion of 3:2:1 and their balance sheet as on 31st March, 2003 stood as follows:


Bills Payable

Creditors

General Reserves

Capital A/cs: Rs.

12,000

14,000

12,000

Buildings

Cash in Hand

Bank

Debtors

21,000

12,000

13,700

12,000

Arti 20,000

Bharti 12,000

Seema 8,000 40,000

Bills Receivable

Stock

Investment

4,300

1,750

13,250

78,000 78,000

Bharti died on 30th 2003, and according to the deed her executors were entitled to be paid as under:

(i) The capital to her credit at the time of her death and interest thereon @ 10%. P.a.(ii) Her share of General reserve.(iii) Her share of profits for the intervening period will be based on the sales during that period.

Sales were Rs. 1,20,000 and the rate of profit had been 10% on sales.(iv) Goodwill according to her share of profit to be calculated by taking twice the amount of profits

of last three years. The profits of the previous three years were Rs. 8200, Rs. 9,000 and Rs. 9,800.

(v) The executors of Bharti were paid off.

Prepare Bharti’s capital account and her executors account.

Ans: Amount paid to Bharti’s executors Rs. 38,300,Share of profit Rs 4,000,Firm’s Goodwill- Rs 54,000, Interest on capital Rs300.

Q9- A, B & C are partners in a firm. The firm has a fixed capital of Rs 60,000 held equally by all the Partners. Under partnership deed the partners were entitled to:

(i) A & B to a salary of Rs 1,800 & Rs 1,600 p.m. respectively.(ii) In the event of the death of a partner, Goodwill be valued at 2 years’ purchase of the average

profits of last three years.(iii) Profits up to the date of death based on the profits of the previous year.(iv) Partners were to be charged interest on drawings @ 5% p.a. & interest on capital @ 6% p.a.B died on 1st January, 2011. His drawings to the date of death were Rs 2,000 & the interest there on Rs 60. The profits for three years ended 31st March, 2008, 2009 & 2010 were

Rs. 21,200, Rs. 3,200 (Dr) & Rs. 9,000 respectively. Prepare B’s Capital Account to calculate the amount payable to his executors.

Ans: Amount Payable to B’s Executors - Rs 41,490, Firm’s goodwill- Rs 18,000, B’s share of profit- Rs 2,250, Interest on capital Rs 900.

DISSOLUTION OF PARTNERSHIP FIRM1 MARK QUESTION

Q1- What is meant by dissolution of a firm?Ans- It means dissolution of partners among all the partners of the firm along with the termination of the firm’s business.

Q2- What is Dissolution of partnership?Ans: It refers to the change in the existing relations of the partners. The firm continues its business.

Q3- Differentiate between Dissolution of partnership & Dissolution of partnership firm.

Ans:Basis Dissolution of partnership Dissolution of partnership firmContinuation of business

It does not affect the continuation of business.

It involves discontinuation of business.

Realisation of assets & liabilities

It requires revaluation of the assets & liabilities.

It requires winding up of the firm & assets are realized , liabilities paid off.

Dissolution of firm It may or may not involve Dissolution of firm

It involves Dissolution of firm.

Closure of books It does not require closure of books.

It requires closure of books.

6 MARKS QUESTIONQ4- A, B & C were partners in a firm sharing profits in the ratio of 4:3:3. The firm was dissolved. After transfer of assets & liabilities to realization Account, the following transactions took place-

(i) L, a creditor to whom Rs 16,000 were due to be paid, took over machinery at Rs 20,000. Balance was paid by him in cash.

(ii) An unrecorded liability of the firm Rs 7,800 was paid by A.(iii) Expenses of realization amounted to Rs 7,400.(iv) Debtors were realized by debt collecting agency by Rs 18,000.(v) Stock of Rs 7,400 were taken over by A for Rs 7,000.(vi) Bank Loan of Rs 15,000 was paid.

Q5- Pass necessary journal entries for the following transactions on the dissolution of firm of K & L after various assets (other than cash) & external liabilities are transferred to realization account.

(i) Expenses of realization Rs 7,400 were paid by L , a partner.(ii) There was a debit balance of Rs 7,500 in the P & L A/c.(iii) L agreed to pay off his wife’s loan.(iv) Sundry creditors Rs 20,000 were paid at 5% discount.(v) Expenses of realization Rs 4,900 were paid by partner L.(vi) Loss on dissolution Rs 9,000 was divided between K & L in the ratio of 3:1.

Q6- Following is the Balance Sheet of X & Y who share profits & losses in the ratio of 4:1 as at 31st March 2008:


Sundry Creditors

Bank Overdraft

X’s Brothers Loan

Y’s Loan

Investment Fluctuation FundCapitalX 50,000

Y 40,000

8,000

6,000

8,000

3,000

5,000

90,000

Bank

Debtors 17,000Less: Provision for doubtful debts 2,000

Stock

Investments

Building

Goodwill

Profit and Loss A/c

20,000

15,000

15,000

25,000

25,000

10,000

10,000

1,20,000 1,20,000

The firm was dissolved on the above date and the following arrangements were decided upon:

i) X agreed to pay off his brother’s Loan.ii) Debtors of Rs. 5,000 proved bad.iii) Other assets realized – Investments 20% less; and Goodwill at 60%.iv) One of the creditors for Rs. 5,000 was paid only Rs. 3,000.v) Building was auctioned for Rs. 30,000 and the auctioneer’s commission amounted to Rs. 1,000.vi) Y took over part of stock at Rs. 4,000 (being 20% less than the book value). Balance stock

realized 50%.vii) Realisation expenses amounted to Rs. 2,000.

Prepare:a) Realisation Account.

b) Partner’s Capital Accounts and c) Bank Account.

ACCOUNTING FOR SHARE CAPITAL

1 MARK QUESTIONQ1- Define Share

Ans- The capital of the company is divided into certain indivisible units of fixed amount. These

units are called shares.

Q2- What are the types of share capital?

Ans: Authorised share capital.

Issued share Capital

Subscribed Capital.

Q3- Give the meaning of Call in Arrears.

Ans: It refers to that part of the capital which has been called up but not yet paid by the share

holder.

Q4- Give the meaning of Calls in Advance.

Ans: It refers to the amount paid by the shareholder in excess of the amount due from them.

3 MARKS QUESTION

Q5- What is Minimum Subscription?

Q6- Distinguish between Reserve Capital & capital Reserve.

Q7- State the purposes for which securities premium amout can be utilized as per section 78 of

the Companies Act.

Q8- What are the conditions for the issue of shares at discount?

Q9- 20,000 shares of Rs. 10 each were issued for public subscription at a premium of 10%. Full amount was payable on Application. Applications were received for 30,000 shares and the Board decided to allot the shares on a pro rata basis. Pass the Journal entries.

Date Particulars L.F. Dr. Cr.Bank A/c ………. Dr. To share application and Allotment A/c(Being the application money received on 30,000shares @ Rs. 11,000 each)

3,30,000

3,30,000

3,30,000

2,00,000 20,0001,10,000

Share Application and Allotment A/c …………. Dr. To Share Capital A/c (20,000 * 10) To Securities Premium A/c (20,000 * Rs.1) To Bank A/c (10,000 * Rs. 11)(Being the share application money adjusted and surplus refunded)

Q9- Rohit Ltd. purchased assets from Rohan & Co. for Rs 3,50,000. A sum of Rs 75,000 was paid by means of a bank draft & for the balance due Rohit Ltd. issued equity shares of Rs 10 each at a premium of 10%. Journalise the above transactions in the books of the company.

Date Particulars L.F. Dr. Cr.Assets A/c ………. Dr. To Rohan & Co.

3,50,000 3,50,000

(Being the assets purchased from Rohan & Co.)3,50,000

75,000 2,50,000 25,000

Rohan & Co. …………. Dr. To Bank A/c To Equity Share Capital A/c To Securities premium A/c(Being amount paid by draft & 25,000 shares issued at 10% premium.)

Q11- X Ltd. purchased machinery for Rs 5,00,000 from Y Ltd. Rs 50,000 was paid by accepting a bill of exchange drawn by Y Ltd. payable after 3 months. The balance was paid by issue of equity shares of Rs 10 each. Pass journal entries in the following cases:

(i) When shares are issued at discount of 10%.(ii) When shares are issued at par.

Ans- No. of shares (i) 50,000 shares (ii) 45,000 shares.

Q12- Sagar Ltd. was registered with an authorized capital of Rs 1,00,00,000 divided into 1,00,000 shares @ Rs 100 each. The company offered for public subscription 60,000 shares. Applications for 56,000 shares were received & allotment was made to all applicants. All the calls were made & duly received except the second & final call on 700 shares. Prepare the Balance Sheet of the company showing different types of share capital.Ans: BALANCE SHEET OF SAGAR LTD. as at………..Particulars Note No. Rs

I. EQUITY & LIABILITIESShareholders’ fundsShare Capital

II. ASSETSCurrent AssetsCash & Cash Equivalents

1.

2.

55,86,000

55,86,000Notes:

1. Share CapitalAuthorised Share Capital1,00,000 equity share capital @ Rs 100 eachIssued Share Capital60,000 Equity Shares @ Rs 100 eachSubscribed Share CapitalSubscribed, but fully paid up55,300 shares @ Rs 100 eachSubscribed but not fully paid up700 shares @ Rs 100 each 70,000Less: Calls in arrears 14,000

2. Cash & Cash Equivalents: Cash at Bank

1,00,00,000

60,00,000

55,30,000

56,00055,86,00055,86,000

Q13- P Ltd. issued 4,000 shares of Rs 100 each at a premium of 10% payable as follows: On application Rs 30 On allotment Rs 50 (including premium) On First & Final Call Rs 30.All shares were applied for & money received on due date with the exception of allotment & call money on 200 shares. These shares were forfeited & reissued at Rs 105 per share. Pass necessary journal entries in the books of the company.Ans: Amount transferred to capital reserve A/c Rs 6,000.

Q14- X Ltd. issued 10,000 shares of Rs 100 each at a discount of 5% payable as follows:On Application Rs 30On Allotment Rs 25

On first Call Rs 40Company received applications for 9,000 shares & all of them were accepted. All money is received except first call money on 200 shares which were forfeited. 100 shares were reissued at Rs 80 per share. Pass necessary journal entries.Company also decided to open a school for the children of employees & children of nearby area. Which value is served by this decision?

Ans: Capital Reserve Rs 4,000. Value- Sensitivity of the company towards education of children of employees & others.

Q15- X Ltd. issued 20,000 shares of Rs 10 each payable Rs 3 on application, Rs 4 on allotment, Rs 3 on first & final call. It received applications for 25,000 shares. Allotment was made on proportionate basis on all applicants. All shareholders paid their dues except ‘A’ who was allotted 200 shares failed to pay allotment & call money. His shares were forfeited & reissued at Rs 8 per share. Pass necessary journal entries to record the transactions .Which value has been followed by the company while making allotment of shares.Ans: Amount transferred to capital reserve- Rs 350. Value – Equality followed while making allotment to all shareholders.

3 Marks QuestionQ16- PS Ltd. forfeited 500 shares of Rs 100 each for the non payment of first call of Rs 30 per share. The final call of Rs 10 per share was not yet made. The forfeited shares vwere reissued at Rs 65,000 fully paid up. Pass necessary journal entries in the books of the company. Ans: Capital reserve- Rs 30,000.

ACCOUNTING FOR DEBENTURESQ1-Name the sources of redemption of Debentures.

Q2- Enumerate the methods of redemption of debentures.

3 MARKS QUESTIONQ3- SSS Ltd. issued 25,000 10% Debentures of Rs 100 each as a collateral security to bank against a loan of Rs 20,00,000. Give necessary journal entries & show the effect in the Balance Sheet. Ans:Date Particulars L.F. Dr. Cr.

Bank A/c ………. Dr. To Bank Loan A/c(Being the loan taken from bank.)

20,00,000

25,00,000

20,00,000

25,00,000

Debenture Suspense A/c …………. Dr. To Debentures A/c(Debentures issued as collateral security for bank loan)

BALANCE SHEET OF SSS Ltd. as atParticulars Note No Rs

I

II

Equity & LiabilitiesNon Current Liabilities

(a) Long term borrowingsAssetsCurrent AssetsCash & Cash Equivalents

1

2

20,00,000

20,00,000

Notes to accounts:

1. Long term borrowingsBank LoanDebentures A/c 25,00,000Less: Debenture suspense A/c 25,00,000

20,00,000

20,00,000

2. Cash & Cash equivalentsCash at bank 20,00,000

Q4- Journalise the following:(i) A debenture issued at Rs 100, repayable at Rs 105.(ii) A debenture issued at Rs 95, repayable at Rs105.(iii) A debenture issued at Rs 110, repayable at Rs 105.The face value of 8% debenture is Rs 100.

Ans:Date Particulars L.F. Dr. Cr.(i) Bank A/c ………. Dr.

To Debenture application & allotment A/c(Being application money received.)

100

1005

100

1005

Debenture application & allotment A/c …………. Dr.Loss on issueof debentures A/c …………..Dr. To 8% Debentures A/c To premium on redemption of debentures A/c(Debentures issued at par, redeemable at premium .)

(ii) Bank A/c ………. Dr. To Debenture application & allotment A/c(Being application money received.)

95

9510

95

100 5

Debenture application & allotment A/c …………. Dr.Loss on issueof debentures A/c …………..Dr. To 8% Debentures A/c To premium on redemption of debentures A/c(Debentures issued at discount ,redeemable at premium .)

(iii) Bank A/c ………. Dr. To Debenture application & allotment A/c(Being application money received.)

110

110 5

110

100 510

Debenture application & allotment A/c …………. Dr.Loss on issue of debentures A/c …………..Dr. To 8% Debentures A/c To premium on redemption of debentures A/c To securities premium A/c(Debentures issued at premium, red. At prem .)

ANALYSIS OF FINANCIAL STATEMENTS

FINANCIAL STATEMENTS OF A COMPANY1 mark question

Q1- What is meant by Financial Statements?Ans- Financial statements are those statements of a company that depict the financial position & result of business activities at the end of the accounting period.

3 mark questionsQ2- List the major heads under which ‘Equity & Liabilities’ are presented in the Balance sheet of a Company as per Schedule VI(Revised), Part I to the Companies Act ,1956.Ans-Particulars Note No. 31-03-2013(Rs) 31-03-2012(Rs)

I. Equity & Liabilities(i) Shareholder’s Funds(ii) Share Application Money

pending allotment(iii) Non Current Liabilities(iv) Current Liabilities

Total

Q3- List the major heads on the assets side of the Balance sheet of a Company as per Schedule VI (Revised), Part I to the Companies Act ,1956.Ans: The major heads o the assets side are: II ASSETS

(i) Non Current Assets(ii) Current Assets.

Q4-List the items which are shown under the headings ‘Current liabilities’ as per Schedule Vi of Companies Act,1956.Ans- The major items under Current Liabilities-

(i) Short term borrowings(ii) Trade Payables(iii) Other Current Liabilities(iv) Short term provisions.

Q5- List the items under head ‘Reserves & Surplus’ in the Balance sheet of a Company as per Schedule VI(Revised), Part I to the Companies Act ,1956.Ans: The major items under Reserves & Surplus-

(i) Capital reserve.(ii) Capital redemption Reserve.(iii) Securities Premium Account.(iv) Debenture Redemption Reserve.(v) Profit & Loss(Cr) balance.

Q6- List the major items under the head ‘ Current assets’ in the Balance sheet of a Company as per Schedule VI(Revised), Part I to the Companies Act ,1956.Ans: The items under the head ‘Current Assets’-

(i) Current investments.(ii) Inventories.(iii) Trade receivables.(iv) Cash & Cash Equivalents.(v) Short term Loans & Advances.(vi) Other Current assets.

Q7- Under which Heading & sub heading following items are shown as per revised schedule VI:(i) Proposed Dividend.(ii) Creditors & B/P.(iii) Provision for tax.(iv) Security Deposit.(v) Work in progress.(vi) Debtors.(vii) Cash at bank.(viii) Prepaid Expenses.(ix) Loose tools.(x) Trade marks.

TOOLS FOR FINANCIAL STATEMENTS- COMPARATIVE & COMMON SIZE STATEMENTS3 marks question

Q1- From the following Balance Sheet of Universe Ltd. as on 31st March 2011 & 2012, Prepare Comparative balance sheet-

Particulars Note No. 2011-12(Rs) 2010-11(Rs)EQUITY & LIABILITIES

(A) Shareholders’ funds(i) Share capital(ii) Reserves & Surplus

NON CURRENT LIABILITIES(I) Long term borrowings

CURRENT LIABILITIES(I) Trade payables

20,00,000 3,00,000

9,00,000

3,00,000

15,00,000 4,00,000

6,00,000

2,00,000 TOTAL 35,00,000 27,00,000ASSETS

(A) NON CURRENT ASSETSFixed Assets(i) Tangible(ii) Intagible

(B) CURRENT ASSETS(i) Inventories(ii) Cash & Cash Equivalents

20,00,000 9,00,000

3,00,0003,00,000

15,00,000 6,00,000

4,00,000 2,00,000

TOTAL 35,00,000 27,00,000

Q2- Prepare a ‘ Comparative Statement of Profit & Loss’ with the help of following information:Particulars 2011(Rs) 2012(Rs)

Revenue from operationsExpensesOther IncomeIncome tax

20,00,00012,00,000 4,00,000

50%

30,00,00021,00,0003,60,000

50%

ACCOUNTING RATIOS1 mark question

Q1- What is meant by Accountig ratios?

Q2-What are the limitations of ratio analysis?

Q3- Compute liquid ratio from the following information: Current assets Rs 90,000; Stock Rs 30,000; Prepaid expenses Rs 10,000; and working capital Rs 40,000. Ans: Liquid ratio 1:1.

Q4- The Current Assets of a company are Rs 15,00,000. Its current is 3 and Liquid ratio is 1.25. Calculate the amount of Current Liabilities , Liquid Assets and Inventory.Ans: Current Liabilities- Rs 5,00,000; Liquid assets Rs 6,25,000; Inventory Rs 8,75,000.

Q5- Compute Debt Equity ratio from the following information- Total Assets Rs 4,00,000, Total Debts Rs 2,50,000, Current Liabilities Rs 1,00,000.Ans: Debt Equity ratio-1:1.

Q6- Rs 4,00,000 is the cost of revenue from operations, inventory turnover ratio is 5 times, Stock at the beginning is 1.5 times more than the stock at the end. Calculate the value of opening & closing stock.Ans: Opening stock Rs 1,14,285 & Closing stock Rs 45,714.

Q7- Find Gross profit ratio-

Revenue from operations (Sales) Rs 6,00,000, Cost of revenue from operations Rs 4,80,000, Direct expenses Rs 40,000.Ans Gross profit ratio 20%.

Documents

saurabhjaitly.weebly.comsaurabhjaitly.weebly.com/uploads/1/0/1/9/10195001/... · Web viewA, B and C are partners in a firm having fixed capital of Rs. 80,000, Rs. 40,000 and Rs. 50,000