CBSE SAMPLE PAPER 04
Class – XII ACCOUNTANCY
Time allowed :3 hours, Max Marks 80
General Instructions:
a) This question paper contains two parts A and B.
b) Part A is compulsory for all.
c) Question 1 to 6 in Section A carrying 1 marks.
d) Question 7 to 10 in Section A carrying 3 marks.
e) Question 11 and 12 in Section A carrying 4 marks.
f) Question 13 to 15 in Section A carrying 6 marks.
g) Question 16 and 17 in Section A carrying 8 marks.
h) Part B has two options-Financial statements Analysis and Computerized Accounting.
i) Question 18 and 19 in Section B carrying 1 mark.
j) Question 20 to 22 in Section B carrying 4 marks.
k) Question 23 in Section B carrying 6 marks.
l) Attempt only one option of Part B.
i) All parts of a question should be attempted at one place.
Part – A
Partnership, Share Capital and Debentures
Question 1. Vinod and Yuvraj are partners in a firm without a partnership deed. Vinod’s Capital is Rs.10,000 and Yuvraj’s capital is Rs.14,000. Yuvraj has advanced a loan of Rs.5,000 and claims interest @ 12% p.a. on it. State with reasons whether his claim is valid or not.
Solution 1. Claim of Vinod is not valid because in the absence of partnership deed, interest on partner’s loan will be given @ 6% p.a.
Question 2. Vinod and Himesh are equal partners. What two main steps they should use in the calculation of goodwill according to the Super Profit Method?
Solution 2. Two main steps involved in the calculation of goodwill are:
i. Calculation of Average Profit
ii. Calculation of Super Profit i.e. Average Profit – Normal Profit
Question 3. Vinay and Vinod were partners in a firm sharing profits in 3:2 ratio. From 1st March, 2016, they decided to change it to 3:1. For this purpose the goodwill of the firm was valued at Rs.1,20,000. Give necessary journal entry for the treatment of goodwill.
Solution 3. Vinay’s Capital A/c Dr. 18,000
To Vinod’s Capital A/c 18,000
(Being adjustment made for goodwill at the time of change in ratio)
Note: Goodwill adjustment amount = 1,20,000 x 3/20 = 18,000
Question 4. A, B and C were partners sharing profits in the ratio of 5:3:2. B retired on 1st January, 2006 with A and C agreeing to share the profits in future in the ratio of 6:4. Find the Gaining Ratio.
Solution 4. Old Share of A and C = 5 : 2
New Share of A and C = 6:4 (given)
Gain Ratio = A = 6/10 – 5/10 = 1/10
C = 4/10 – 2/10 = 2/10
Question 5. State the steps other than rejecting applications that a company can take in case of over subscription.
Solution 5. A company can exercise the following options:
i. To make pro rata allotment to the applicants
ii. Company may reject some applications and make pro rata allotment to the remaining
applicants.
Question 6. As per the new guidelines of the Companies Act, 2013, what minimum amount of profit is required to be transferred to the Debenture Redemption Reserve before redemption?
Solution 6. As per the new guidelines of the Companies Act, 2013, minimum 25% amount of
the profit is required to be transferred to the Debenture Redemption Reserve before
redemption.
Question 7. What is meant by Minimum Subscription?
Solution 7.
Minimum subscription can be described as follows: As per the section 39 of the Companies Act, 2013, Minimum subscription is that
amount which company must receive through the subscription of shares issued by the company. As per the SEBI’s guidelines, a company must receive 90% subscription of the issued share capital before making allotment of shares/debentures to the applicants. In case of less than 90% Subscription Company may cancel the issue and refund the
money the applicants.
Question 8. AK and BK were sharing profits in the ratio of 3:2. They decided to admit CK into the partnership for 1/6th share of the future profits. Goodwill was valued at 4 times the average super profit of the firm was Rs.18,000. The firm had assets worth Rs.15,00,000 and Liabilities Rs.12,00,000. The Normal earning capacity of such firms is expected to be 10% p.a. You are required to ascertain the Average Profit or Actual Profit earned by the firm during the last 4 years.
Solution 8. Goodwill (given) = 18,000
Goodwill is calculated by = Super Profit x 4
i.e. 18,000 = Super Profit x 4
Super Profit = 18,000/4 = 4,500
Capital Employed = Assets – Liabilities
i.e. 3,00,000 = 15,00,000 – 12,00,000
Question 9. Complete the following journal entries by filling the blank spaces when Vinod Limited forfeited 200 shares of Rs.20 each, Rs.15 per share called up on which Rs.10 per share had been paid
Date | Particulars | L.F. | Debit | Credit |
| ............................ A/c Dr. To..................... A/c To Calls in Arrears A/c (Being 200 shares forfeited for not paying the call money Rs.5 per share) ............................. A/c Dr. ............................. A/c. Dr. To......................... A/c (Being 200 forfeited shares reissued as Rs.15 per share paid for payment of Rs.10 each) ............................. A/c. Dr. To......................... A/c (Being gain on reissue transferred to capital reserve) |
| 3,000 | 3,000 |
Solution 9. Journal Entries
| Date | Particulars | L.F. | Debit | Credit |
|
| Share Capital A/c Dr. To Share Forfeiture A/c To Calls in Arrears A/c (Being 200 shares forfeited for not paying the call money Rs.5 per |
| 3,000 | 2,000 |
|
| share) Bank A/c Dr. |
| 2,000 | 1,000 |
|
| Share Forfeiture A/c Dr. |
| 1,000 | 3,000 |
|
| To Share Capital A/c (Being 200 forfeited shares reissued as Rs.15 per share paid for payment of Rs.10 each) |
| 1,000 | 1,000 |
| Share Forfeiture A/c Dr. To Capital Reserve A/c (Being gain on reissue transferred to capital reserve) |
|
|
|
Question 10. The authorised capital of Vinod Limited is Rs.45,00,000 divided into 30,000 shares of Rs.150 each. Out of these, company issued 15,000 shares of Rs.150 each at a premium of Rs.10 per share. The amount was payable as follows:
Rs.50 per share on application
Rs.40 per share on allotment (including premium)
Rs.30 per share on first call
Balance on final call
Public applied for 14,000 shares.
All the money was duly received.
Prepare company’s balance sheet (extract) as per Schedule III of the Companies Act, 2013 and also prepare Notes to Accounts.
Solution 10. Balance Sheet
Particulars | Note No. | Amount |
EQUITY AND LIABILITIES Shareholders’ Funds | 1 | 21,00,000 |
| 2 | 1,40,000 |
Total |
| 22,40,000 |
ASSETS |
|
|
Current Assets | 3 | 22,40,000 |
Cash and Cash Equivalents |
|
|
|
| 22,40,000 |
Notes to Accounts
Particulars | Amount |
Share Capital Authorised Capital
Issued Capital
Subscribed Capital
Reserves and Surplus Securities Premium Reserve Cash and Cash Equivalents |
22.50.000
1.40.000 22.40.000 |
Question 11. The following is the Balance Sheet of A, B and C as on 31st March 2014:
Liabilities | Amount | Assets | Amount | |
Sundry Creditors | 4,500 | Cash in hand | 300 | |
Cash at bank | 7,500 | |||
Reserve Fund | 4,800 | Stock | ||
9,000 | ||||
Capitals: A | 15,000 | Debtors | ||
9,000 | ||||
B | 7,500 | Furniture | ||
12,000 | ||||
C | 7,500 |
| ||
| Loose Tools | 1,500 | ||
| 39,300 |
| 39,300 |
C died on 30th June, 2014. Under the terms of Partnership Deed, the executors of the deceased
partner were entitled to:
i. Amount standing to the credit of Partner’s Capital Account.
ii. Interest on Capital @ 6% per annum.
iii. Share of goodwill on the basis of twice the average of past three years profits.
iv. Share of profit from the closing of last financial year to the date of death on the basis of last year’s profit. The profit of the last three years were as follows:
Year Profits
2011-12 9,000
2012-13 10,500
2013-14 12,000
The firm closes its books on 31st March every year. The partners shared profits in the ratio of their capitals. Prepare C’s Capital Account to be presented to her executors
Solution 11.
C’s Capital Account
Particulars | Amount | Particulars | Amount |
To C’s Executor’s A/c (Bal. fig.) | 14,813 | By Balance b/d By Interest on Capital By Reserve Fund By A’s Capital A/c By C’s Capital A/c By Profit and Loss Suspense | 7.500 1,200 113 3.500 1,750 750 |
| 14,813 |
| 14,813 |
Important Notes:
1. Goodwill = 9,000 + 10,500 + 12,000 = 31,500/3 = 10,500 x 2 = 21,000
2. Interest on capital = 7,500 x 6/100 x 3/12 = 113
3. C’s Share of profit = 12,000 x 3/12 x 1/4 = 750
Question 12. Satnam and Qureshi after doing their MBA decided to start a partnership firm to manufacture ISI marked electronic goods for economically weaker section of the society. Satnam also expressed his willingness to admit Julie as a partner without capital who is specially abled but a very creative and intelligent friend of him. Qureshi agreed to this. They formed a partnership on 1st April,2014 on the following terms:
i. Satnam will contribute Rs.4,00,000 and Qureshi will contribute Rs.2,00,000 as capitals.
ii. Satnam, Qureshi and Julie will share profits in the ratio of 2:2:1.
iii. Interest on capital will be allowed @ 6% p.a.
Due to shortage of capital Satnam contributed Rs.50,000 on 30th September, 2014 and Qureshi contributed Rs.20,000 on 1st January, 2015 as additional capitals. The profit of the firm for the year ended 31st March, 2015 was Rs.3,37800.
a. Identify any two values which the firm wants to communicate to the society.
b. Prepare Profit and Loss Appropriation Account.
Solution 12.
Values highlighted are:
i. Respect for Law (by manufacturing ISI marked electronic goods)
ii. Women Empowerment
iii. Sensitivity towards the specially abled people
Profit and Loss Appropriation Account
Particulars | Amount | Particulars | Amount |
To Interest on Capital: |
|
|
|
Satnam’s Capital A/c | 25,500 |
|
|
Qureshi’s Capital A/c | 12,300 |
|
|
To Profit Transferred to: | 1,20,000 | By Profit and Loss A/c | 3,37,800 |
Satnam’s Capital A/c | 1,20,000 |
|
|
Qureshi’s Capital A/c | 60,000 |
|
|
Juliee’s Capital A/c |
|
|
|
| 3,37,800 |
| 3,37,800 |
Question 13. (a) Vinod and Ashish were partners in a firm sharing profits in the ratio of 3:2. Their capitals were Rs.80,000 and Rs.50,000 respectively. They admitted Gaurav in the firm on 1st January, 2013 as a new partner for 1/5th share in the future profits. Gaurav brought Rs.60,000 as his capital. Calculate the value of goodwill of the firm and record necessary journal entries on Gaurav’s admission.
(b) AK, NK and SK were partners in a firm sharing profits in the ratio of 5:3:2. Goodwill
appeared at Rs.90,000 and General Reserve at Rs.50,000 in the books of the firm. NK decided
to retire from the firm. On the date of his retirement, goodwill of the firm was valued at
Rs.2,40,000. The new profit sharing ratio of AK and SK was 2:3. Give entries
Solution 13.
(a) Journal Entries
Date | Particulars | L.F. | Debit | Credit |
| Bank A/c Dr. To Gaurav’s Capital A/c (Being capital introduced by Gaurav) Gaurav’s Capital A/c Dr. To Vinod’s Capital A/c To Ashish’s Capital A/c (Being adjustment of premium for goodwill is done) |
| 60,000 22,000 | 60,000 13,200 8,800 |
(b) Journal Entries
Date | Particulars | L.F. | Debit | Credit |
| AK’s Capital A/c Dr. NK’s Capital A/c Dr. SK’s Capital A/c Dr. To Goodwill A/c (Being old goodwill written off) General Reserve A/c Dr. To AK’s Capital A/c To NK’s Capital A/c To SK’s Capital A/c (Being General Reserve shared by the partners) SK’s Capital A/c Dr. To AK’s Capital A/c To NK’s Capital A/c (Being goodwill adjusted at the time retirement) |
| 45.000 27.000 18.000 50.000 96.000 | 90.000 25.000 15.000 10.000 24.000 72.000 |
Question 14. (a) On 1st April, 2012 a company issued 4,000 9% debentures of Rs. 100 each at a discount of 10%, repayable at a premium of 10%. The terms of issue provided for the redemption of Rs. 40,000 debentures every year commencing from March 31st, 2014, either by purchase from open market or by draw of lots at the company’s option. On March 31st, 2014, the company purchased for cancellation its own debentures of the face value of Rs. 32,000 at Rs. 95 per debenture and Rs. 8,000 at Rs. 90 per debenture. The expenses of purchase amounted to Rs. 1,000. Record necessary journal entries for redemption of 9% debentures.
(b) Company has converted its 550; 9% Debentures of Rs.1,000 each into New 13%
Debentures of Rs.100 each. The new debentures were issued at a premium of 10%
Solution 14. (a) Journal Entries
Date | Particulars | L.F. | Debit | Credit |
| Own Debentures A/c Dr. To Bank A/c (Being company purchased its own 320 debentures) 9% Debentures A/c Dr. |
| 38,600 | 38,600 |
| To Own Debentures A/c To Gain on Cancellation |
| 40,000 | 38,600 1,400 |
| (Being own debentures cancelled) Gain on Cancellation A/c Dr. To Capital Reserve (Being gain transferred to capital reserve) |
| 1,400 | 1,400 |
(b) Journal Entries
Date | Particulars | L.F. | Debit | Credit |
| 9% Debentures A/c Dr. To Debenture holders A/c (Being amount due to the debenture holders) |
| 5,50,000 | 5,50,000 |
| Debenture holders A/c Dr. To 13% Debenture A/c To Securities Premium (Being new debentures issued) |
| 5,50,000 | 5,00,000 50,000 |
Note: No. of Debentures issued = 5,50,000/110 = 5,000
Question 15. Vinod and Mukesh were partners in a firm sharing profits in the ratio of their capitals. On 31st March, 2013, their Balance Sheet was as follows:
Liabilities | Amount | Assets | Amount |
Creditors | 1,50,000 | Bank | 2,00,000 |
Workmen compensation fund | 3,00,000 | Debtors | 3,40,000 |
General Reserve | 75,000 | Stock | 1,50,000 |
Vinod’s Current A/c | 25,000 | Furniture | 4,60,000 |
Capitals: Vinod | 10,00,000 | Machinery | 8,20,000 |
Mukesh | 5,00,000 | Mukesh’s Capital A/c | 80,000 |
| 20,50,000 |
| 20,50,000 |
On the above date the firm was dissolved:
i. Debtors were realised at a discount of 5%. 50% of the stock was taken over by Vinod at 10% less than the book value. Remaining stock was sold for Rs.65,000.
ii. Furniture was taken over by Mukesh for Rs.1,35,000. Machinery was sold as scrap for Rs.74,000.
iii. Creditors were paid in full.
iv. Expenses on realisation Rs.8,000 were paid by Vinod.
Prepare Realisation Account
Solution 15.
Realisation Account
Particulars | Amount | Particulars | Amount |
To Debtors To Stock To Furniture To Machinery To Bank A/c (creditors) To Vinod’s Capital A/c (Realisation Expenses) | 3.40.000 1.50.000 4.60.000 8.20.000 1.50.000 8.000 | By Creditors By Vinod’s Capital A/c (stock) By Bank A/c (assets realised) Stock 65,000 Debtors 3,23,000 Machinery 74,000 By Mukesh’s Capital A/c By Loss Transferred: Vinod Mukesh | 1.50.000 67,500 4.62.000 1.35.000 7,42,333 3,71,167 |
| 19,28,000 |
| 19,28,000 |
Question 16. W and R were partners in a firm sharing profits in the ratio of 3:2 respectively. On 31st March, 2013, their Balance Sheet was as follows:
Liabilities | Amount | Assets | Amount |
Bank Loan Creditors Investment Fluctuation Fund Capitals: W R | 10,000 17,500 4.000 20.000 15,000 | Cash Debtors 10,000 Less: Provision 350 Stock Plant Patents Investments Goodwill | 2.500 9,650 12.500 17.500 10,350 10,000 4,000 |
| 66,500 |
| 66,500 |
B was admitted as a new partner on the following conditions:
i. B will get 4/15th share of profits.
ii. B had to bring Rs.15,000 as his capital.
iii. B would pay cash for his share of goodwill based on 2.5 years purchase of average profit of last 4 years.
iv. The profits of the firm for the years ending 31st March, 2010, 2011, 2012 and 2013 were Rs.10,000; Rs.7,000; Rs.8,500 and Rs.7,500 respectively.
v. Stock was valued at Rs.10,000 and provision for doubtful debts was raised up to Rs.500.
vi. Plant was revalued at Rs.20,000.
Prepare Revaluation Account, Partners Capital Account and Balance Sheet of new firm.
OR
Lalit, Madhur and Neena were partners sharing profits as 50%, 30% and 20% respectively.
On 31st March, 2013, their Balance Sheet was as follows:
| Liabilities | Amount | Assets | Amount |
| Creditors | 28,000 10,000 | Cash Debtors 47,000 | 34.000 44.000 |
Provident Fund Investment Fluctuation Fund Capitals: Lalit Madhur Neena | 10,000 50.000 40.000 25.000 | Less: Provision 3,000 Stock Investments Goodwill Profit and Loss A/c | 15.000 40.000 20.000 10,000 |
| 1,63,000 |
| 1,63,000 |
On this date, Madhur retired and Lalit and Neena agreed to continue on the following terms:
i. The goodwill of the firm was valued at Rs.51,000.
ii. There was a claim for workmen compensation to the extent of Rs.6,000.
iii. Investment were brought down to Rs.15,000.
iv. Provision for bad debts was reduced by Rs.1,000.
v. Madhur was paid Rs.10,300 in cash and the balance was transferred to his loan account
payable in two equal instalments together with interest @ 12% p.a.
Prepare Revaluation Account, Partners Capital Accounts and Madhur’s Loan Account till the
loan is finally paid off.
Solution 16.
Revaluation Account
Particulars | Amount | Particulars | Amount |
To Stock A/c | 2,500 | By Plant A/c By Loss Transferred: | 2,500 90 60 |
To Provision for doubtful debts | 150 | W’s Capital A/c | |
|
| R’s Capital A/c | |
| 2,650 |
| 2,650 |
Partners’ Capital Account
Particulars | W | R | B | Particulars | W | R | B |
To Goodwill To Rev. A/c | 2,400 90 | 1,600 60 | 15,000 | By Bal. b/d By I.F.F | 20,000 2,400 | 15,000 1,600 | 15,000 |
To Bal. c/d | 23,210 | 17,140 | By Premium By Cash A/c | 3,300 | 2,200 |
| 25,700 | 18,800 | 15,000 |
| 25,700 | 18,800 | 15,000 |
Balance Sheet
Liabilities | Amount | Assets | Amount | |
|
| Cash | 23,000 | |
Bank Loan | 10,000 | Debtors 10,000 | ||
9,500 | ||||
Creditors | 17,500 | Less: Provision 500 | ||
10,000 | ||||
Capitals: W | 23,210 | Stock | ||
20,000 | ||||
R | 17,140 | Plant | ||
10,350 | ||||
B | 15,000 | Patents | ||
10,000 | ||||
|
| Investments | ||
| 82,850 |
| 82,850 |
OR
Revaluation Account
Particulars | Amount | Particulars | Amount |
To Workmen Compensation | 6,000 | By Provision for bad debts By Loss Transferred: Lalit Madhur Neena | 1,000 10,000 |
To Investment | 15,000 | 6,000 4,000 | |
| 21,000 |
| 21,000 |
Partners’ Capital Account
Particulars | Lalit | Madhur | Neena | Particulars | Lalit | Madhur | Neena |
To Rev. A/c |
|
|
|
|
|
|
|
To P/L A/c | 10,000 | 6,000 | 4,000 |
|
|
|
|
To Goodwill | 5,000 | 3,000 | 2,000 | By Bal. b/d |
| 40,000 |
|
To Madhur | 10,000 | 6,000 | 4,000 | By Lalit’s Cap. | 50,000 | 10,929 | 25,000 |
To Cash | 10,929 | 10,300 | 4,371 | By Neena’s Cap. |
| 4,371 |
|
To Madhur loan | 14,071 | 30,000 | 10,629 |
|
|
|
|
To Bal. c/d |
|
|
|
|
|
|
|
| 50,000 | 55,300 | 25,000 |
| 50,000 | 55,300 | 25,000 |
Madhur’s Loan Account
Date | Particulars | Amount | Date | Particulars | Amount |
Mar. 31, 2013 | To Bal. c/d | 30,000 | 31 March | By Madhur’s Cap. A/c | 30,000 |
|
| 30,000 |
|
| 30,000 |
2014 Mar. 31 | To Cash A/c To Bal. c/d | 18,600 15,000 |
| By Balance b/d By Interest | 30,000 3,600 |
|
| 33,600 |
|
| 33,600 |
2015 Mar.31 | To Cash A/c | 16,800 |
| By Balance b/d By Interest | 15,000 1,800 |
|
| 16,800 |
|
| 16,800 |
Question 17. Vinod Limited issued 40,000 Equity Shares of Rs.10 each at a premium of Rs.2.50 per share. The amount was payable as follows:
On Application ……………………… Rs.2 per share
On Allotment ………………………. Rs.4.50 per share (including premium)
And on Call …………………………..Rs.6 per share
Allotment was made to the applicants as follows:
i. Applicants for 20,000 shares were allotted 10,000 shares
ii. Applicants for 56,000 shares were allotted 14,000 shares
iii. Applicants for 48,000 shares were allotted 16,000 shares
It was decided that excess amount received on applications would be utilised on allotment and the surplus would be refunded.
Ram, to whom 1,000 shares were allotted, who belongs to category (i), failed to pay allotment
money. His shares were forfeited after the call.
Pass necessary journal entries in the books of Vinod Limited for the above transactions.
OR
Vinod Limited invited applications for issuing 80,000 shares of Rs.10 each at a premium of Rs.40 per share but applications were received only for 77,000 shares. Complete the following journal entries.
| Date | Particulars | L.F. | Debit | Credit |
| .................. A/c Dr. To........................ A/c (Being application money received @ Rs.35 each including Rs.30 premium) ....................... A/c Dr. To........................ A/c To Securities Premium A/c (Being application money adjusted) ....................... A/c Dr. To........................ A/c To Securities Premium (Being allotment money due @ Rs.8 including premium of Rs.4 each share) ....................... A/c Dr. To........................ A/c (Being allotment money received except on 7,000 shares) ....................... A/c Dr. Securities Premium A/c Dr. To........................ A/c To Share Allotment A/c (Being 7,000 shares forfeited by the Vinod Limited) ....................... A/c Dr. To........................ A/c To Securities Premium A/c (Being first and final call due with premium) ....................... A/c Dr. To........................ A/c (Being first and final call received except on 500 shares) ....................... A/c Dr. |
| 6,16,000 | 26.95.000 3.85.000 4.20.000 4.86.500 3.500 |
| Securities Premium A/c Dr. To........................ A/c To First and Final Call A/c (Being 500 shares forfeited by the Vinod Limited) ...................... A/c Dr. To........................ A/c To Securities Premium A/c (Being 1,000 shares reissued @ Rs.50 per share fully paid, including 500 shares, which were forfeited after the call) ...................... A/c Dr. To........................ A/c (Being gain on forfeiture transferred to the capital reserve) |
|
|
|
Solution 17.
Journal Entries
Date | Particulars | L.F. | Debit | Credit |
| Bank A/c Dr. To Equity Share Application A/c (Being application money received) Equity Share Application A/c Dr. To Equity Share Capital A/c To Equity Share Allotment A/c |
|
| 2,48,000 |
| To Bank A/c |
| 2,48,000 | 80,000 |
| (Being application money adjusted) |
|
| 1,47,000 |
| Equity Share Allotment A/c Dr. To Equity Share Capital A/c |
| 2,48,000 | 21,000 |
| To Securities Premium |
| 1,80,000 | 80,000 |
| (Being allotment money due) Bank A/c Dr. |
| 30,500 | 1,00,000 |
| To Equity Share Allotment (Being allotment money received) |
| 2,40,000 | 30,500 |
| Equity Share First and final call A/c Dr. To Equity Share Capital A/c |
| 2,34,000 | 2,40,000 |
| (Being first and final call due) |
|
| 2,34,000 |
| Bank A/c Dr. |
| 10,000 |
|
| To Equity Share first and final call |
| 2,500 | 4,000 |
| (Being first and final call received) |
|
| 2,500 |
| Equity Share Capital A/c Dr. Securities Premium A/c Dr. To Share Forfeiture A/c To Share Allotment A/c To first and final call (Being 1,000 shares forfeited by the Vinod Limited) |
|
| 6,000 |
Note : Calculation of applied shares = 20,000/10,000 x 1,000 = 2,000 shares.
OR
| Date | Particulars | L.F. | Debit | Credit |
|
| Bank A/c Dr. To Equity Share Application A/c (Being application money received @ Rs.35 each including Rs.30 premium) Equity Share Application A/c Dr. To Equity Share Capital A/c To Securities Premium A/c (Being application money adjusted) Equity Share Allotment A/c Dr. To Equity Share Capital A/c To Securities Premium (Being allotment money due @ Rs.8 including premium of Rs.4 each share) Bank A/c Dr. To Equity Share Allotment (Being allotment money received except on 7,000 shares) Equity Share Capital A/c Dr. Securities Premium A/c Dr. To Share Forfeiture A/c |
| 26,95,000 26.95.000 6.16.000 5.60.000 63.000 | 26.95.000 3.85.000 23.10.000 3.08.000 3.08.000 5.60.000 56.000 |
| To Share Allotment A/c |
|
| 35,000 |
| (Being 7,000 shares forfeited by the Vinod Limited) |
| 28,000 |
|
| Equity Share First and final call A/c Dr. |
| 4,90,000 | 70,000 |
| To Equity Share Capital A/c To Securities Premium A/c |
| 4,86,500 | 4,20,000 |
| (Being first and final call due with premium) Bank A/c Dr. |
| 5,000 | 4,86,500 |
| To Equity Share first and final call |
| 3,000 | 3,500 |
| (Being first and final call received except on 500 shares) Equity Share Capital A/c Dr. |
| 50,000 | 4,500 |
| Securities Premium A/c Dr. |
| 7,000 | 10,000 |
| To Share Forfeiture A/c |
|
| 40,000 |
| To First and Final Call A/c (Being 500 shares forfeited by the Vinod Limited) Bank A/c Dr. To Share Capital A/c To Securities Premium A/c (Being 1,000 shares reissued @ Rs.50 per share fully paid, including 500 shares, which were forfeited after the call) Share forfeiture A/c Dr. To Capital Reserve (Being gain on forfeiture transferred to the capital reserve) |
|
| 7,000 |
Part – B
Analysis of Financial Statements
Question 18. Redemption of Debentures would result in inflow, outflow or no flow of cash.
Give your answer with reason.
Solution 18.
Redemption of debentures is outflow of cash because it is a payment to the
debenture holders and decreases cash.
Question 19. When is interest received considered as financing activity?
Solution 19. When a company receives interest on calls in arrears it is considered as
financing activity.
Question 20. (a) How will you show the following items in the balance sheet of a company?
(i) Capital Reserve
(ii) Statement of P/L
(iii) Bank Overdraft
(iv) Income received in advance
(b) State any one objective of Financial Statement Analysis.
Solution 20. (a) Items to be shown in the Balance Sheet:
(i) Capital Reserve ----------- Shareholders Funds-------------Reserves and Surplus
(ii) Statement of P/L --------- Shareholders Funds-------------Reserves and Surplus
(iii) Bank Overdraft---------- Current Liabilities -------------- Short-term borrowings
(iv) Income received in advance------ Current Liabilities ----- Other current liabilities
(b) The main objective of Financial Statement Analysis is to know long term as well as short
term solvency of the business firm.
Question 21. Calculate ‘Return on Investment’ and ‘Debt to Equity Ratio’ from the following
information:
Net Profit after Interest and Tax Rs.3,00,000
10% Debentures Rs.5,00,000
Tax Rate 40%
Capital Employed Rs.40,00,000
Solution 21.
(i) Return on Investment = Net Profit before interest and tax/capital employed x 100
= 5,50,000/40,00,000 x 100 = 13.75%
Working Note:
Net Profit before Interest and Tax = 3,00,000 + 50,000 (Interest) + 2,00,000 Tax = 5,50,000
(ii) Debt to Equity Ratio =
Debt = 5,00,000 i.e.10% Debentures
Equity = Capital Employed 40,00,000 – Debt 5,00,000 = 35,00,000
Debt/Equity = 5,00,000/35,00,000 = 1:7
Question 22. Following information was extracted from the Statement of Profit and Loss for
the years ended 31st March, 2012 and 2013. Prepare Comparative Statement of Profit and
Loss:
Particulars | 31.3.2013 | 31.3.2012 |
Revenue from operations Employees benefit expenses Other expenses Tax rate | 10,00,000 5,00,000 50,000 50% | 8,00,000
50% |
Solution 22.
Comparative Statement of Profit and Loss
Particulars | 31.3.2013 | 31.3.2012 | Absolute change | % change |
(i) Revenue from operations | 10,00,000 | 8,00,000 | 2,00,000 | 25 |
(ii) Expenses:
| 5,00,000 50,000 |
| 1,00,000 (50,000) | 25 (50) |
Total Expenses | 5,50,000 | 5,00,000 | 50,000 | 10 |
Net profit before tax (i -ii) | 4,50,000 | 3,00,000 | 1,50,000 | 50 |
Less: Tax | 2,25,000 | 1,50,000 | 75,000 | 50 |
Net profit after tax | 2,25,000 | 1,50,000 | 75,000 | 50 |
Question 23. (a) Prepare Cash Flow Statement from the following Balance Sheet:
| Particular | Note No. | 31.3.2013 (Rs) | 31.3.2012 (Rs) |
I 1. 2. | Equity and Liabilities Shareholder’s Funds: Share Capital Reserve and Surplus Current Liabilities: Trade Payables | 1 | 6.30.000 3.08.000 2.80.000 | 5.60.000 1.82.000 1,82,000 |
Total |
| 12,18,000 | 9,24,000 | |
II 1. 2. | Assets: Non-Current Assets: Fixed Assets: Tangible (machinery) Current Assets: Inventories Trade Receivables Cash and Cash equivalents |
| 3.92.000 98.000 6.30.000 98.000 | 2,80,000 1.40.000 4.20.000 84.000 |
| Total |
| 12,18,000 | 9,24,000 |
Notes to Accounts:
Particulars | 31.3.2013 | 31.3.2012 |
Reserves and Surplus Surplus i.e. Balance in Statement of P/L | 3,08,000 | 1,82,000 |
Additional Information:
(b) An old machinery having book value of Rs.42,000 was sold for Rs.56,000.
Depreciation provided on machinery during the year was Rs.28,000
Solution 23.
Cash Flow Statement
Particulars | Detail | Amount |
A. Cash Flow from Operating Activities | 1,26,000 |
|
Net Profit before tax | 28,000 |
|
Add: Depreciation | (14,000) |
|
Less: Profit on sale of Machinery | 1,40,000 |
|
Operating profit before working capital changes | 98,000 |
|
Add: Trade payables Add: Decrease in Inventories | 42,000 (2,10,000) | 70,000 |
Less: Increase in Trade Receivable Cash flow from operating activities before tax | 70,000 | (1,26,000) |
B. Cash Flow from Investing Activities Proceeds from sale of machinery | 56,000 | 70,000 |
Purchase of machinery Cash used in Investing Activities | (1,82,000) |
|
C. Cash Flow from Financing Activities |
|
|
Issue of Shares | 70,000 |
|
Cash Flow from Financing Activities |
|
|
D. Decrease in Cash and Cash Equivalents (A + B + C) |
| 14,000 |
Add: Cash and Cash Equivalents in the beginning |
| 84,000 |
Cash and Cash Equivalents at the end |
| 98,000 |
Working Note: Plant and Machinery Account
Particulars | Amount | Particulars | Amount |
To Bal. b/d | 2,80,000 | By Bank A/c | 56,000 |
To Gain on sale of machinery | 14,000 | By Depreciation | 28,000 |
To Bank A/c (Bal. fig. purchase) | 1,82,000 | By Bal. c/d | 3,92,000 |
| 4,76,000 |
| 4,76,000 |
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